Lohas Stock Equity Alert: Lifeway Foods, Inc. (LWAY) Research Update Released
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New York, NY - August 27, 2013 (www.investorideas.com newswire) On August 23, 2013, Taglich Brothers released an updated research report on Lifeway Foods, Inc. (LWAY) and reiterated a Speculative Buy rating with the 12-month price target lowered to $18.60 per share from $19.65 due to a reduced 2014 sales forecast, partly offset by improved sector valuation. The report noted the following key investment considerations:
Lifeway Foods' brand awareness campaign and nationwide distribution should drive three-year annualized sales growth of 14% to $114 million by 2014. Our 2014 forecast reflect distribution of LWAY's frozen Kefir through 5,000 US stores, up from less than 500 in 2011, and distribution at Harvey Nichols, a London-based retailer.
Distribution to mainstream stores such as Target nationwide and Costco in New England should support Kefir growth. US Wal-Mart supercenter grocery stores began carrying Lifeway products in 1Q13. Introduction of new ProBugs products such as Green Kefir, Blast, and Bitesfor babies should drive sales to existing customers.
2Q13 gross sales (reported on 8/14/13) grew by 13.7% to $25.8 million, $2.6 million below our forecast. EPS decreased to $0.09 from $0.13 per share. We projected EPS of $0.14 per share.
Reduced our 2013 sales projection by $7.8 million to $105 million reflecting 2Q13 results, which did not include initial inventory stocking at Wal-Mart supercenter stores. EPS forecast lowered to $0.39 per share from $0.49 due to lower sales, higher milk prices, and professional fees stemming from the purchase of a new manufacturing facility from bankruptcy.
We lowered our 2014 EPS projection to $0.42 from $0.57 per share due to costs relating to the new manufacturing facility purchased in 2013. We decreased our sales forecast by $21 million to $114 million to exclude the initial 1Q13 inventory stocking at Wal-Mart, thus lowering our previously anticipated sales run rate.
Lifeway Foods, Inc., (LWAY) based in Morton Grove, Illinois is a manufacturer of cultured, probiotic and functional food products in the health food industry, and is America's leading supplier of the cultured dairy product known as kefir. Their products are sold to health conscious consumers through health food stores and to the mass-market consumers through supermarkets.
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