NEW YORK (AP) -- Janney Capital Markets told clients Tuesday that Dean Foods is a good bet, seeing better cash flow and profitability ahead.
Dean's spinoff of WhiteWave and the sale of its Morningstar division for a price tag that exceeds fair value have given the company financial flexibility and provided more focus, said analyst Jonathan Feeney. A 10 percent to 15 percent cut in capacity that already underway will help as well, he said.
Dean Foods is worth about $12 per share, excluding the about $15 per share value of its stake in WhiteWave Foods Co. The company plans to spin off part of its remaining stake in WhiteWave later this month.
Deans' free cash flow should get a boost, and amount to $1 per share, or $187 million, in 2015, Feeney said, raising his rating on the company to "Buy," rom "Neutral."
Shares of Dean Foods Co. rose almost 2 percent, or 35 cents, to $19.50 in premarket trading.
Company shares are up 16 percent this year and are trading just below four-year highs.