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BNNY Message Board

  • jdprofile_1 jdprofile_1 Dec 21, 2012 9:54 AM Flag

    Misleading Research

    The recent CSFB research report is bogus. They’ve had a $48 price target on this pig since August and they have stubbornly refused to change their tune because they are making money via their investment banking relationship.

    They fail to mention the recent “bearish articles” which have brought the stock down focus on the unsustainable valuation, not just the sloppy financial reporting and fact that management is selling shares as fast as they can and the private equity owners have taken every penny and more out in dividends.

    They talk about how reasonable the “price earnings growth rate” is – unfortunately that is a metric that sell side analysts make up when every other sign says SELL. Its completely meaningless.

    Investors need to look at P/E and Enterprise Value to EBITDA. Even if the company hits CSFB’s optimistic projections you will be sitting on a stock with a 33 P/E at the end of 2015 THREE YEARS FROM NOW at CSFB’s $48 price target.

    The point is even if the company hits its numbers for the next 12 quarters its STILL way overvalued. Google trades at a 22 P/E today and under a 14 P/E 3 years from now. Also, its trading at roughly DOUBLE the valuation of its peers like Hain.

    To paraphrase they also make the point: there are more Kraft consumers trading up to Annies than Annies consumers trading down to Kraft. I don’t think this is the case – the economy is bad and many people are not willing to pay $1 more for cheap food like Mac & Cheese. Do “organic” and Mac & Cheese go together anyway?

    Sentiment: Sell