White Wave Foods Stock Downgraded

On Wednesday morning, the stock of White Wave Foods(NYSE: WWAV), which has a $56 price target on shares, was reduced on rating from “buy” to “hold” at Jefferies.

Such move can be interpreted in a way that Jefferies thought there is not any significant room for White Wave Foods stock to go up, which appeals convincing when taking into account that the shares of White Wave are higher by 0.07% to $55.95 in pre-market trading today.

What else which worth mentioning is that, last week, yogurt giant Danone offered to buy the organic foods producer at $56.25 a share, a 24% premium over White Wave’s 30-day average closing price of $45.43, the companies said. That would value White Wave at $10.1 billion based on 180.2 million shares outstanding at the end of last year.

In addition, recent reports suggested PepsiCo was interested in White Wave as a way to diversify its beverage business, but ultimately passed on the opportunity due to price.

“That supports the notion that the company’s valuation was largely viewed as full and that other companies may not see the same synergy potential as Danone,” Jefferies noted, “we are downgrading White Wave Foods…given our view that the chance of a higher, alternative bid emerging is fairly remote owing to; full/rich valuation…significant synergies earmarked by Danone unlikely to be topped by alternative bidders; reports that PepsiCo was interested but thought the valuation was full; and risk that deal may hit anti-trust hurdles not fully priced into stock.”

Separately, The Street Ratings Team has a “Buy” rating with a score of B on the stock.

The Street explanation highlights White Wave Foods’ strengths in multiple areas, such as its impressive record of earnings per share growth, revenue growth, expanding profit margins, solid stock price performance and notable return on equity. 

However, The Street Ratings objectively rated this stock according to its “risk-adjusted” total return prospect over a 12-month investment horizon. Not based on the news in any given day.

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