Sysco Analyst Says Restaurant Supplier Will Emerge From COVID-19 'A Much Stronger Company'

Although the pandemic has adversely impacted food distributor Sysco Corporation’s SYY business, the recent pressure on its shares presents a buying opportunity, according to Edward Jones.

The Sysco Analyst: John Boylan upgraded Sysco from Hold to Buy.

The Sysco Thesis: While the stock is trading significantly below its 52-week high, Sysco is likely to “emerge from the pandemic a much stronger company,” Boylan said in the upgrade note.

The analyst said he expects Sysco to take meaningful market share from small competitors as the impact of the pandemic subsides and eating-away-from-home normalizes.

“Additionally, new management is streamlining operations, adding new services, and improving its online capabilities. While restaurant demand for its products may remain volatile in the short term, we believe it has solid long-term prospects and that patience could be rewarded,” he said. 

Boylan said he expects Sysco to continue looking for smaller tuck-in acquisitions that will help boost annual sales.

“We believe there maybe opportunities to purchase competitors in the wake of the coronavirus pandemic.”  

SYY Price Action: Sysco shares were trading 0.6% higher at $61.80 at the time of publication Thursday.

Public domain photo via Wikimedia.