Post Holdings Is A Natural Hedge For Uncertain Times, Says Analyst

Mizuho Securities analyst John J. Baumgartner initiated coverage on the shares of Post Holdings Inc POST with a Buy rating and a price target of $110.

Over 20 acquisitions of Post since 2012 have focused on attractively-priced assets providing platforms for growth or smaller entities with synergies, says the analyst.

When the market undervalues assets, POST enhances returns through alternative structures, including spin-offs and recapitalizations, notes the analyst.

POST's portfolio is a blend of categories in the ambient and refrigerated states, and includes a large foodservice presence.

According to the analyst, Post's diversification across substitute products and channels is underpinned by category-leading positions and wide "competitive moats" that enhance aggregate stability of demand.

The analyst is confident of the long-term EBITDA growth potential. Pet category demand is stable, consolidation opportunities and synergies are abundant, and POST's entry is via under-earning assets in the value and sub-premium price segments, says the analyst.

The analyst views POST as one of Food's most balanced models, and the value-oriented portfolio is well-positioned as consumers economize spending. 

Strong cash returns provide optionality for share repurchase, debt reduction, and M&A, as per the analyst.

Price Action: POST shares are trading higher by 0.78% at $93.39 on the last check Tuesday.

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