SunOpta

STKL : NASDAQ : US$10.72
SOY : TSX
BUY 
Target: US$13.00

COMPANY DESCRIPTION:
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
Investment recommendation
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.
Investment highlights
 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.
Valuation
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

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