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Dean Foods Company Message Board

  • aruba270155 aruba270155 Feb 14, 2013 7:42 AM Flag

    Still have access to that UBS #$%$, target now $ 18.

    Skimmed Target
    􀂄 Adjusting Our Model; Lowering Price Target
    Following 4Q earnings, we are lowering our ‘13e EPS to $1.08 (-23% YOY) from
    $1.28—largely reflecting the sale of Morningstar. In addition our new estimates
    reflect: 1) lower WhiteWave profitability (+12% YOY), 2) a low-single-digit decline
    in Fresh Dairy Direct volume (partly offset by stepped up cost reductions), and 3)
    lower corporate costs. Our new sum-of-the-parts based $18 price target (from $19)
    reflects a lower profit growth outlook and enterprise value for WhiteWave.
    􀂄 Solid 4Q, But with Reminders of a Competitive Dairy Environment
    Despite a rise in raw fluid milk costs in 4Q (Class 1 +23% Q/Q) and ongoing
    volume declines (-0.8% YOY), FDD adj operating profit beat our expectations
    (+2% vs. UBSe -5%). However, the impending loss of private label volume in
    2013 is a stark reminder of Dean’s limited pricing power and the overcapacity
    within the fluid milk industry.
    􀂄 4Q Beat on Better Fresh Dairy Direct Performance
    4Q adj EPS including Morningstar results was $0.40 (+45% YOY; UBSe/cons
    $0.30). The beat to our model was largely driven by better than expected top-line
    growth (+3.7% vs. UBSe 1.5%) given higher price pass through in the Fresh Dairy
    Direct business. Gross margin and operating expenses were in line with UBSe,
    while below the line items were a cumulative $0.03 benefit (largely tax related).
    􀂄 Valuation: Neutral Rated; Lowering Target to $18 from $19
    Our new sum-of-the-parts based target assumes a 5x 2014e EV/EBITDA multiple
    for the Fresh Dairy Direct business, and 11x for Dean’s share of WhiteWave.

    $ 18 is their base target. Optimistic EVP high-end target is $ 20.94.

    Sentiment: Hold

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    • IMHDO DF will beat the coming quarterly EPS Estimates again. They are consistently giving EPS estimates and then beat them. I think that due to all the moving parts (DF, WWAV, etc.) this time they decided to be very conservative and thus also gave a wide range of trheir EPS Estimate.

      Sentiment: Hold

 
DF
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