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Sysco (SYY) saw its price target slashed to $77 from $83 by Piper Sandler following the company’s announced $29.1 billion acquisition of Restaurant Depot, with the analyst citing concerns over the company’s plan to take on $21 billion in new debt and push net leverage to 4.5x.
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The sharp market reaction and Piper Sandler’s cautious stance signal investor skepticism about Sysco’s ability to manage integration risks and de-leverage while suspended share buybacks reduce shareholder returns in the near term, though management projects meaningful EPS accretion and cost synergies if execution succeeds.
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Sysco Corporation (NYSE:SYY) stock took a hit when the company announced a $29.1 billion deal to acquire Restaurant Depot on March 30. The market didn’t love it, and Wall Street analysts are starting to weigh in. Piper Sandler is among the first to formally revise its outlook, and the firm isn’t holding back.
Piper Sandler lowered its price target on Sysco stock to $77 from $83 while keeping a Neutral rating on the shares. The firm said it was “quite surprised” by the announcement, signaling this deal caught even seasoned observers off guard.
|
Ticker |
Company |
Firm |
Action |
Old Rating |
New Rating |
Old Target |
New Target |
|---|---|---|---|---|---|---|---|
|
SYY |
Sysco |
Piper Sandler |
Price Target Cut |
Neutral |
Neutral |
$83 |
$77 |
Piper Sandler isn’t a fan of this transaction. The firm noted that this view appears to align with the broader market’s reaction, given the sharp sell-off in Sysco stock following the announcement.
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Piper Sandler thinks the market reaction was fairly rational and wouldn’t be a buyer on this pullback. That’s a pointed statement for a firm maintaining a Neutral rating rather than stepping to an outright downgrade.
The concern here is straightforward: size and debt. Sysco plans to take on $21 billion in new debt, pushing net leverage to around 4.5x at closing. That’s a significant jump for a company with a current market cap of $35.02 billion.
Sysco shares fell roughly 8% premarket on the announcement and are now down 13.5% over the past month. The share repurchase program has also been paused to prioritize de-leveraging, removing a key source of shareholder returns in the near term.
