Being in food is usually a pretty good market. It’s one of those things that people always need. US Foods (NYSE:USFD) found that much out, as a recent analyst upgrade sent shares up fractionally in Tuesday afternoon’s trading. The upgrade in question came from UBS, where analysts boosted the stock to a Buy rating with a $64 price target due to “several factors.”
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Among these factors were a rising market share, signs that its overall EBITDA growth levels were repeatable, and an overall improvement in the food industry’s economic backdrop. The only serious risk for US Foods right now, according to Piper Sandler, was an overall drop in the US macroeconomic environment. And even then, it would mean a slowdown, not a stop.
Addressing Potential Slowdown Early
While an overall economic slowdown would hurt US Foods, it may not deliver the kind of blow some would expect. US Foods has been actively working to expand its operations. It recently acquired IWC Food Service and Saladino’s Foodservice, two food distributors that allow US Foods better access to the greater Nashville and California regions.
Saladino’s, in fact, was the 17th largest food service distributor by itself, which will give US Foods a lot more muscle in the field. Adding both will expand its market and product offerings, including new food and beverage options along with janitorial supplies, among other items.
Is US Foods a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on USFD stock based on six Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 27.02% rally in its share price over the past year, the average USFD price target of $55.25 per share implies 10.74% upside potential.
