NEW YORK (TheStreet) -- Before Monday's market open, US Foods(USFD) - Get Report stock was initiated with a "buy" rating and a $28 price target at Deutsche Bank because of the stock's "attractive valuation" and the food distributor' potential to gain share in the domestic foodservice distribution industry.
"We expect USFD to generate LDD EBITDA growth and strong FCF driven by initiatives, which include gaining share in the more profitable independent restaurant channel, growing sales of higher-margin private brands, center-of-the-plate and produce categories, and driving cost savings and efficiencies," Deutsche Bank analysts wrote in a note released this morning.
BMO Capital Markets analysts, which initiated coverage of US Foods with a "market perform" rating and a $25 price rating, believe the stock is not easy to value due to "higher leverage, lower ROIC, and lack of a dividend and share buybacks," compared with felow distributor Sysco (SYY).
Analysts were more bullish on the company's growth prospects and cost saving initiatives.
US Foods growth will be driven by the company's focus on the independent restaurant segment and initiatives that could save up to $270 million over the next three years, BMO analysts wrote in a separate note.
Shares of US Foods, which went public in May, closed down 1.67% to $23.56 on Monday.