US Foods a Buy at Melius Research as firm rolls out food distributor coverage

As previously reported, Melius Research analyst Jacob Aiken-Phillips initiated coverage of US Foods (USFD) with a Buy rating and $90 price target and started Performance Food Group (PFGC) with a Hold rating and $95 price target and Sysco (SYY) with a Hold rating and $85 price target as the launches coverage on the food distributors as a stand-alone sector. Among the “big three,” the firm points to a strong management team, top-tier technology, exposure to stickier, higher-margin healthcare and hospitality, and free cash flow to support $2B in share repurchases for its preference for US Foods. Management has laid out a “credible plan” to hit 20% EPS growth through 2027, the analyst added. For the others, the firm sees 9% upside to its price targets, driving its Hold ratings.