NEW YORK (TheStreet) -- Sysco Corp. (SYY) was downgraded to "hold" from "buy" at Deutsche Bank on Tuesday morning. The firm said it lowered its rating on the food distributor based on a valuation call following the cancelation of the US Foods merger deal.
On Monday, Sysco announced it abandoned the merger deal with US Foods after the FTC blocked the deal on concerns it would be anticompetitive.
"We believe Sysco's risk/reward is less attractive after yesterday's announcement," Deutsche Bank said in an analyst note.
Deutsche Bank has a $40 price target on Sysco stock.
"Specifically, our downgrade is based on valuation...the potential for a more competitive landscape in the near term, the reality that future cost savings could be smaller than we hoped for...and the buyback is less meaningful than we had hoped for," the note continued.
Shares of Sysco closed at $37.54 on Monday afternoon.
Separately, TheStreet Ratings team rates SYSCO CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate SYSCO CORP (SYY) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins."