Write-up Holdings is “a put up-er little one for solid absolutely free cash stream,” according to JPMorgan. Analyst Ken Goldman initiated coverage on the business with an obese ranking. He also established a value target of $100 for each share, suggesting shares could increase more than 25% from Thursday’s close. The packaged food stuff company features a wide variety of types and brand names, many of which are beneath personal labels. Its portfolio involves cereals this sort of as Honey Bunches of Oats and Fruity Pebbles, as very well as pet meals models Rachael Ray Nutrish and 9Lives. The business also sells frozen dishes, cheeses, eggs and egg substitutes. “Post generates robust cash flow, which may possibly be used in big quantities to lower financial debt and buy back stock around the following two decades,” Goldman reported in a Friday note. In excess of the previous 6 decades, Post’s cost-free hard cash movement conversion price was a median 156%, nicely above the median more substantial-cap foodstuff producer’s 92% median conversion rate. The analyst expects this outperformance craze to carry on. “We believe that that more than the next couple of yrs, the combination of (a) common margin and EBITDA improvement, (b) personal debt paydown, and (c) share repurchases—the latter two pushed by Post’s robust no cost income stream generation—will guide to outsized upside in the inventory price versus the team,” Goldman included. The firm’s exceptional enterprise model also supplies traders a differentiated expenditure opportunity, the analyst included. The firm routinely engages in portfolio transformation and is “not afraid” to purchase reduce-advancement belongings as lengthy as they provide reliable income circulation, Goldman mentioned. He also mentioned that the enterprise is also “a lot less frightened” of carrying leverage for a interval of time. The business prioritizes free funds flow more than earnings and does not fork out a dividend. “Post’s model is not for everyone buyers who like revenue expansion stories, fewer M & A chance, and dividends are likely to appear elsewhere. But for those who worth income movement and you should not head the occasional offer, you will find nothing else really like Write-up in our universe,” Goldman said Shares ticked up .5% Friday throughout premarket investing. The stock is down 11.8% yr to day. Post YTD mountain Publish in 2023 —CNBC’s Michael Bloom contributed to this report.
