STKL : NASDAQ : US$10.72
SOY : TSX
SunOpta is a vertically integrated supplier of
natural/organic ingredients and packaged products. We
view SunOpta as one of the best ways to play the healthy
food wave that is flowing through the entire food industry
Consumer & Retail — Health, Wellness and Lifestyle
NON-GMO ACTIVITY AS STRONG AS
EVER; RAISING TARGET TO $13
FROM $12, MAINTAIN BUY
We continue to believe that SunOpta’s focus on natural and
organic products will deliver favorable growth and that the
current non-GMO trend is driving an acceleration.
Non-GMO labeling continues to rise significantly and sourcing
more non-GMO is accelerating. We expect Boulder Brands’
conversion of its $180M Smart Balance spreads business to
non-GMO is a $10-$20M opportunity for STKL.
Introducing F2015 forecasts and establishing new segment
forecasts to reflect STKL’s recent change in segment
disclosure. The revised segments better illustrate relative
growth and margins as SunOpta grows its value-added and
higher margin segments.
Continue to expect a challenged Q1 with flat earnings, but
anticipate margins to recover in Q2 with continued growth.
At 23x forward EPS and 11x EBITDA, STKL trades at a roughly
25% discount to its natural/organic packed food and distribution
peers. Given expanding sector valuations, we are raising our
target to $13 from $12, or now 11x our F2015 EBITD