BB&T Reiterates Buy Rating on Calavo Growers (CVGW)

BB&T Capital Markets is out with a research report this afternoon, where it reiterates its Buy rating on Calavo Growers Inc. CVGW; it has a $27 price target on the stock. The BB&T analysts cited a recent conference call with management, where the key takeaways were positive. They believe that the company is making sizable inroads at retail with its guacamole and salsa businesses. The analysts also noted strong avocado volumes, which were higher by 30% for the quarter. The BB&T analyst also noted that hummus is becoming a strong focus for the company and that they believe it will aggressively pursue that opportunity, perhaps considering an acquisition to jumpstart the initiative and gain scale relatively quickly. As for valuation, the analyst remarked, “We have a price target of $27, based upon 13.5x our FY'12 EPS estimate plus the $3/sh value of the Limoneira stake. CVGW currently trades at 13.2x our FY'11 estimate, which we believe is likely conservative, adjusted for its stake in Limoneira. Our target multiple represents a nearly 30% discount to its historical forward multiple and a 5% discount to the group.”