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

Credit Suisse's Investment Policy Committee added US Foods Holding Corp (NYSE: 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 (NYSE: 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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