Lifeway Foods, Inc. (LWAY) Research Update Released
New York, NY - June 2, 2014 (www.investorideas.com newswire) 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 $16.45 per share from $18.60 due to reduced sector valuation . The report noted the following key investment considerations:
Lifeway Foods' brand awareness campaign, nationwide distribution, and European and Canadian sales should drive three-year annualized sales growth of 18.4% to $149.2 million by 2015. Our projections reflect distribution of LWAY's frozen Kefir through 6,000 US stores, up from less than 500 in 2011, distribution at London-based retailers Harvey Nichols and Holland & Barrett, and commencement of Canadian distribution in 2H14.
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. Driving sales to existing customers was the 2013 launch of Green Kefir, Blast, and Bites for babies, and the 2014 launch of Lifeway Veggie Kefir.
1Q14 gross sales (reported on 4/12/14) increased 16.2% to $32.1 million, $2.1 million below our forecast. LWAY's profit was $0.04 per share vs. $0.14 per share in the year-earlier quarter. We projected EPS of $0.01 per share. The EPS decrease from last year stems from a 35% increase in milk prices.
We lowered our 2014 sales forecast by $1.2 million to $128.4 million reflecting 1Q14 results. We increased our 2014 EPS projection to $0.30 from $0.24 per share due to 2H14 efficiencies from the new manufacturing facility purchased in 2013 that should exceed our prior expectations.
In 2015 we project sales growth of 16.2% to $149.2 million and EPS of $0.52 per share, essentially unchanged from our prior forecast. Growth reflects expanded sales in Europe and distribution in Canada. Income should benefit from a reduction in milk prices from the record highs of 1Q14.
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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