Smart Balance markets functional food products in the U.S. under the Smart Balance and Earth Balance trademarks. The company sells its Smart Balance products in groceries, mass merchandise, and convenience stores. Of the 11 analysts covering the stock, 27% recommend a buy while the remaining suggest a hold. Based on the consensus estimates of analysts polled by Bloomberg, the stock has an implied upside of 34.4% and is currently trading at $4.01.
The company recently reaffirmed its 2010 outlook and estimated net sales to track 2009 levels. Meanwhile, during the fourth quarter, Smart Balance incurred nearly $1 million as organization restructuring charges, which would eventually lead to $1.5 million in annualized savings. Besides, the company has cut its employee strength by almost 12%. Combined, the restructuring activities would lead to a one-time cost of $4 million and accordingly to a corresponding annualized savings of more than $4 million.
Heading into 2011, the company estimates net sales in the mid-single digit percentage range, compared to the 2010 levels. Cash operating income is seen growing in the high single-digit percentage range, compared to 2010. Smart Balance expects its three-tier strategy in the spreads category will enable expansion of its market share in 2011 from 15.3% in 2010. The company is seeking to grow its share in the overall milk category in 2011, after the launch of Fat Free and Lactose Free Plus Calcium milk varieties.As per analysts at Northland Capital Markets, the company's visibility is gradually improving and is estimated profitable in 2011. Key growth drivers are the reorganization of sales and marketing, organizational restructuring and the company's focus on leveraging the earlier investments. The company intends to focus on promoting the Smart Balance brand, the national launch of Smart Balance milk, and the establishment of a three-tier spreads strategy with the addition of Bestlife spreads, all of which will help it to capitalize on future growth rates.