Credit Suisse Sees 'Particularly Attractive Value' In US Foods, Adds To Focus List

Credit Suisse's Investment Policy Committee added US Foods Holding Corp USFD to its "U.S. Focus List" as the food service company is now considered to be a top investment idea.

The analysts are positive on the overall food service industry but see "particularly attractive value" in US Foods as the company is now showing earnings momentum after a "disruptive" merger attempt with SYSCO Corporation SYY.

According to the analysts, US Foods' fourth quarter earnings report sent a signal to the market that its fundamentals remain strong. Specifically, the company reported independent case growth of 6.1 percent and also guided its full-year 2017 EBITDA to grow by 7 to 10 percent.

The analysts also highlighted the multiple international initiatives that can drive growth while at the same time the company can foster industry consolidation to improve its 9 percent market share.

Meanwhile, US Foods' stock is trading at a "sizeable" valuation discount to Sysco of two to three turns on NTM (next 12 months) EV/EBITDA. In fact, the analysts $32 price target implies an approximate 10x EV/NTM EBITDA and approximate 24x NTM P/E which represents a discount to Sysco.

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