Sysco Corp SYY

Sysco: Investor Day Buoys Our Confidence in Growth Prospect but Shares Don’t Offer Much Upside

Sysco provided an updated strategy and growth algorithm at its May 22 investor day that largely confirmed our forecasts. As such, we don't expect a major change to our $78 fair value estimate for wide-moat Sysco. Shares were down about 3%, which we theorize reflected the market's reaction to the company's long-term growth algorithm being slightly weaker than consensus forecasts. Management unveiled a three-year growth algorithm for 4%-6% sales growth, 6%-8% adjusted operating income and adjusted EPS growth, and total shareholder return of 9%-11%. This is in line with our forecast before the earnings call for three-year CAGRs for sales and adjusted EPS of 4.2% and 7.5%, respectively.