UBS Securities Sees United Natural Foods as Benefitting from S-Curve

In a report published Tuesday, UBS Securities analyst Jason DeRise reiterated a Neutral rating and $75.00 price target on United Natural Foods (NASDAQ: UNFI).

In the report, UBS Securities noted, “In our US Natural Foods Retail Q-Series ‘Are the aisles wide enough for all competitors?' our bottom up model shows each natural food retailer opening grows natural foods retail sales by 22%. This increases the market share of the natural food retailers within each new store's 5 mile trade area from 9% to 11%. This shows that bottom up, there is more demand for natural foods than is currently being met. Unit openings by Whole Foods and others is a key driver of UNFI's sales growth.

"Top down, our S-Curve paradigm also supports our view of sustained sales growth for UNFI as we expect the industry sales CAGR to remain 9%-10% over the next 10 years, and then keep growing. This supports our view that UNFI can keep its organic sales growth at 11% per year.”

United Natural Foods closed on Monday at $67.80.