US Foods Not Immune To Recession But Has Potential To Outperform: Analyst

Piper Sandler analyst Brian Mullan upgraded US Foods Holding Corp USFD to Overweight from a Neutral rating and raised the price target to $59 (from $45).

The analyst is bullish on the stock as they see a relatively clear path to hit the "high $50's / low $60's" levels over the next ~12 months, following its fourth-quarter result announcement last week.

US Foods reported revenue of $8.936 billion, beating the street view of $8.791 billion, and adjusted EPS increased 16.4% to 64 cents, missing the street view of 67 cents.

For the first quarter, the company sees adjusted EBITDA of $340 million to $355 million.

Mullan says if the broader U.S. macro environment worsens, they see a slowdown in restaurant industry traffic impacting the Food Distribution industry case volumes, which can be a matter of concern.

In the case of the U.S. recession, the analyst expects the company to struggle but outperform most of the company in their coverage, especially the full-service owner-operators.

Mullan revised revenue and EPS estimates to $37.405 billion (from $36.383 billion) and $3.03 (from $3.23) for 2024 and $38.820 billion (from $37.518 billion) and $3.52 (from $3.83) for 2025.

The analyst notes that consensus expects 10.5% adjusted EBITDA growth for this year, followed by +8.7% in 2025 and +8.9% in 2026.

Price Action: USFD shares are trading higher by 0.48% at $49.82 on the last check Tuesday.