Research Alert: CFRA Keeps Hold Opinion On Shares Of Sysco Corporation
CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:We raise our 12-month target by $1 to $85, on 17x our FY 27 (Jun.) EPS estimate and in line with the company's three-year average forward P/E. We raise our FY 26 estimate to $4.63 from $4.58 and FY 27's to $5.03 from $4.96. Following Q3 FY 26 results that showed improving U.S. case volume growth of +2.3%, we reiterate our Hold view. SYY saw improved gross margins of 18.6% (+30 bps Y/Y), driven by an acceleration in higher-margin U.S. local case volume growth of +3.3%. However, our optimism is balanced by the potential for the Restaurant Depot acquisition to increase leverage, which management expects will push leverage to 4.5x. The deal includes a suspension of SYY's share buyback plan as well as planned equity issuance. While the acquisition is compelling from a total addressable market and margin standpoint, expanding SYY's presence in the independent restaurant segment, we believe the size of the deal comes with integration risks that could pressure near-term profitability and limit financial flexibility.
