Deutsche Banks Reports "Hobson's Choice" On ConAgra Foods

According to Deutsche Bank, ConAgra Foods' CAG stock's valuation is low vs. peers, the balance sheet is solid, dividend yield is high, and recent reduction in LT growth goals is logical. Deutsche Bank reported that it sees the stock likely to trade in the low to mid $20s for a while. “We affirm our opinion with macro-factors buffeting results and few indications this will change soon. Our target price remains $23 and is based on 3 methodologies incl DCF based on: 3% sales, 4% EBIT, 7% EPS growth using a 9% WACC (via CAPM: 0.8 beta, 4.5% risk free rate, 10% required return) along with our IVCC framework and traditional multiples. Upside risk incl: input cost (energy, raw matls), savings. Downside risks incl: competition (branded, pvt label), input costs.” ConAgra Foods closed yesterday at $22.93.