Citi has started coverage on Sysco (SYY, Financial) with a Neutral rating and set a price target of $78. The firm has a positive outlook on the North American food distribution industry, suggesting that the sector's restaurant wallet share might help mitigate macroeconomic risks. Additionally, Citi notes that the industry faces limited tariff concerns.
In contrast, Citi highlights Performance Food Group and US Foods as companies experiencing growth that enhances leverage and operational efficiencies, which could fuel further expansion. For Sysco (SYY, Financial), however, the analyst indicates it may be premature to invest, as the company awaits easier comparison metrics and a rebound in sales from independent restaurants.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 12 analysts, the average target price for Sysco Corp (SYY, Financial) is $79.69 with a high estimate of $88.00 and a low estimate of $72.00. The average target implies an upside of 10.71% from the current price of $71.98. More detailed estimate data can be found on the Sysco Corp (SYY) Forecast page.
Based on the consensus recommendation from 19 brokerage firms, Sysco Corp's (SYY, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Sysco Corp (SYY, Financial) in one year is $85.44, suggesting a upside of 18.7% from the current price of $71.98. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Sysco Corp (SYY) Summary page.
SYY Key Business Developments
Release Date: April 29, 2025
- Revenue: $19.6 billion, up 1.1% on a reported basis, and up 1.8% excluding the divestiture of Mexico.
- Adjusted Operating Income: $773 million, down 3.3% from the previous year.
- Adjusted EPS: $0.96, flat compared to last year.
- SYGMA Segment Sales Growth: 9.5% for the quarter.
- International Segment Profit Growth: Double-digit growth for the sixth consecutive quarter.
- Gross Margin: 18.3%, with improved gross profit per case performance.
- Product Inflation: 2.1% for the total enterprise.
- Free Cash Flow: $954 million year to date.
- Share Repurchases: $700 million year to date, including $400 million this quarter.
- Dividend Increase: Quarterly cash dividend increased by $0.03 to $0.54 per share, a 6% increase year over year.
- Net Debt Leverage Ratio: 2.8 times.
- Full Year 2025 Guidance: Adjusted EPS growth of at least 1%, with reported net sales growth of approximately 3%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sysco Corp (SYY, Financial) reported sales growth of 1.1% on a reported basis and 1.8% when excluding the divestiture of Mexico.
- The International segment posted another compelling quarter with double-digit profit growth, marking the sixth consecutive quarter of such performance.
- Sysco Corp (SYY) successfully passed through approximately 2.1% inflation for the quarter, converting negative foot traffic into positive sales.
- The SYGMA segment delivered strong sales growth of 9.5% for the quarter, driven by significant customer wins.
- Sysco Corp (SYY) has made solid progress on its $100 million profit improvement efforts, with positive contributions from strategic sourcing and inbound logistics efficiency improvements.
Negative Points
- Sysco Corp (SYY) experienced a 3.1% decline in foot traffic to restaurants, reflecting industry challenges and adverse weather conditions.
- The company reported a decrease in adjusted operating income by 3.3% compared to the previous year.
- Sysco Corp (SYY) faced challenges due to shaken consumer confidence, with the Michigan consumer confidence survey highlighting low levels not seen in approximately 20 years.
- The local business segment delivered negative 3.5% volume growth for the quarter, a step down from Q2 performance.
- Sysco Corp (SYY) lowered its full-year guidance for FY25, expecting reported net sales growth of approximately 3%, down from the prior target of 4% to 5%.
