"Piper Sandler lowered its price target on Sysco stock to $77 from $83 while keeping a Neutral rating on the shares. The firm said it was 'quite surprised' by the announcement, signaling this deal caught even seasoned observers off guard."
"The concern here is straightforward: size and debt. Sysco plans to take on $21 billion in new debt, pushing net leverage to around 4.5x at closing. That's a significant jump for a company with a current market cap of $35.02 billion."
"Piper Sandler thinks the market reaction was fairly rational and wouldn't be a buyer on this pullback. That's a pointed statement for a firm maintaining a Neutral rating rather than stepping to an outright downgrade."
"Sysco is the world's largest food-service distribution company, operating 337 distribution centers across 10 countries and serving roughly 730,000 customer locations."
Sysco Corporation announced a $29.1 billion acquisition of Restaurant Depot, resulting in a sharp decline in its stock price. Piper Sandler lowered Sysco's price target from $83 to $77, maintaining a Neutral rating. The market reacted negatively due to concerns over the company's plan to take on $21 billion in new debt, increasing net leverage to approximately 4.5x. Sysco shares fell about 8% premarket and 13.5% over the past month, with a pause on share repurchase programs to focus on de-leveraging.
Read at 24/7 Wall St.
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