Dean Foods Stock Downgraded on Increased Competition Concerns
Wells Fargo believes Dean Foods needs better visibility into margin stability before it's viewed as a value story.

Shares of the dairy product manufacturing company Dean Foods ( DF) were rising over 1% during Wednesday morning trading despite a downgrade of the stock to "Market Perform" from "Outperform" at Wells Fargo.

The firm lowered its price target on the owner of dairy brands including Land O'Lakes, to $12 from $25.

Wells Fargo analyst John Baumgartner argues that competition from dairy processors is mounting and he anticipates the company will need additional time to rectify the issues related to the pressures in private label milk margins, according to a note obtained by StreetInsider.

Baumgartner believes those near-term risks endure and that the company would need better visibility into margin stability "before we again view DF as a value story."

The downgrade comes a day after shares of Dean Foods plummeted over 20% after the company reported disappointing second quarter earnings and lowered its full-year guidance.

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