UNFI Upgraded to Buy, New Price Target at $36 by Northcoast

United Natural Foods (UNFI) has been upgraded to a Buy rating by Northcoast, with a new price target of $36. Analysts forecast an average target price of $27.57, indicating a 4.24% upside from the current price. UNFI reported a 7.5% sales growth in Q3, with a 12% increase in wholesale natural products sales and a 3% increase in wholesale conventional products sales. Adjusted EBITDA grew 21% to $157 million, and free cash flow generated $119 million in the quarter.

United Natural Foods (UNFI) has been upgraded to a Buy rating by Northcoast, with a new price target of $36. This upgrade comes amidst the company's robust performance in the third quarter (Q3) of fiscal 2025. The analysts forecast an average target price of $27.57, indicating a 4.24% upside from the current price.

In Q3, UNFI reported a 7.5% sales growth, with a notable 12% increase in wholesale natural products sales and a 3% increase in wholesale conventional products sales. The company's adjusted EBITDA grew by 21% to $157 million, and free cash flow generated $119 million in the quarter. Despite these positive results, UNFI has faced challenges, including a significant cyber incident that temporarily disrupted its operations in the fourth quarter of fiscal 2025.

The cyber incident, which occurred in the fourth quarter of fiscal 2025, is expected to reduce fiscal 2025 net sales by about $350-$400 million and lower adjusted EBITDA by $40-$50 million. UNFI expects the incident to result in a net loss of $50 million to $60 million, including the estimated tax impact. The company has taken measures to mitigate the impact of the incident, including restoring primary ordering systems within 10 days and operating at more normalized levels.

Despite the recent challenges, UNFI remains committed to its strategic goals of improving operational efficiency, optimizing its network, and growing its natural and organic segments. The company's focus on lean management practices, wholesale business realignment, and customer support efforts underscores its commitment to long-term value creation.

The upgrade by Northcoast reflects the company's ability to navigate short-term challenges while maintaining a focus on long-term growth. Investors should monitor UNFI's progress in addressing the cyber incident and its ongoing efforts to enhance operational efficiency and growth in its natural and organic segments.

References:
[1] https://www.checkout.ie/a-brands/united-natural-foods-projects-up-to-400m-annual-sales-hit-after-cyber-breach-219516
[2] https://www.nasdaq.com/articles/unfi-revises-2025-guidance-maintains-long-term-growth-focus