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Why Whitewave Foods (WWAV) Was Upgraded

Story updated at 9:40 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Whitewave Foods (WWAV) was upgraded to "market perform" from "underperform" by BMO Capital.

Whitewave Foods gained 1.5% to $26.50 Friday.

The firm raised its price target for the company to $24 from $19. The firm said that Whitewave Foods' growth outlook is improving.

Analyst Amit Sharma wrote, "We are upgrading WWAV to Market Perform as solid consumption trends in WWAV's key categories coupled with modest, if any, margin impact from the California drought significantly weakens our bearish investment thesis. Though organic sales growth is expected to slow from double-digit levels, deceleration likely will be less than our expectations and should be overshadowed by sales contribution from the recent Earthbound Farms acquisition."

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Separately, TheStreet Ratings team rates WHITEWAVE FOODS CO (THE) as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate WHITEWAVE FOODS CO (THE) (WWAV) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, WWAV's share price has jumped by 40.23%, exceeding the performance of the broader market during that same time frame.
  • WWAV's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • When compared to other companies in the Food Products industry and the overall market, WHITEWAVE FOODS CO (THE)'s return on equity is below that of both the industry average and the S&P 500.
  • WHITEWAVE FOODS CO (THE)'s earnings per share declined by 6.7% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($0.72 versus $0.31).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Food Products industry. The net income has decreased by 7.6% when compared to the same quarter one year ago, dropping from $26.29 million to $24.29 million.
  • You can view the full analysis from the report here: WWAV Ratings Report

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