Lifeway Foods, Inc. (LWAY) Research Update Released
New York, NY - August 22, 2014 (www.investorideas.com newswire) Taglich Brothers released an updated research report on Lifeway Foods, Inc. (LWAY) and reiterated a Speculative Buy rating with a 12-month price target of $16.45 per share . 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 19% to $150.3 million by 2015. Our projections reflect distribution of LWAY's frozen Kefir through 6,000 US stores, up from approximately 4,000 in 2013, distribution at London-based retailers Harvey Nichols and Holland & Barrett, and Canadian distribution to 1,000 stores starting in 3Q14.
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 2013. Driving sales to existing customers are new products -- Green Kefir, Blast, Bites for babies, Lifeway Veggie Kefir.
2Q14 gross sales (reported on 8/11/14) increased 26.1% to $32.6 million, $2.5 million above our forecast. LWAY's profit was $0.07 per share vs. $0.09 in the year-earlier quarter. We projected EPS of $0.01 per share. The EPS decrease from last year stems from a 30% increase in milk prices and a 28% increase in selling expenses to $3.7 million.
We increased our 2014 sales forecast by $2.3 million to $128.4 million to reflect 2Q14 results. We decreased our 2014 EPS projection to $0.26 from $0.30 per share due to higher than anticipated selling expenses to $14.7 million from our prior forecast of $12.2 million, partly offset by efficiencies from a recently purchased manufacturing facility in Wisconsin.
In 2015 we project sales growth of 15% to $150.3 million and EPS of $0.48 per share, our prior EPS forecast was $0.52 per share on sales of $149.2 million. Growth reflects expanded sales in Europe and distribution in Canada. We anticipate income will benefit from a reduction in milk prices relative to 2014 and a full year benefit from production of its new manufacturing facility in Wisconsin.
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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