J.P. Morgan lowered its investment rating on Dean Foods (DF) to market perform from buy on share price. Analyst Erika Long says she is downgrading on share price and recent debt downgrade by S&P. Long says the stock yesterday exceeded her $68 target, making it appropriately valued at 8 times her calendar year 2003 EBITDA estimate, while S&P downgrade could raise the company's interest expense.
She notes that Dean Foods now consists of both DF and Suiza Foods Corp. following Suiza's purchase of DF last month. Long says Suiza management has proven themselves to be excellent executors. She says she would be a buyer of DF stock back at around $60. She sees $3.96 a share calendar year 2001 earnings and earnings per share of $4.72 for calendar year 2002.