Dairy foods business BGA is trading more than 60% below its dizzy heights back in 2018 as dairy processing remains an industry under pressure. Yet, from a valuation perspective, the stock is still not exciting given the trajectory of earnings. While we stay attracted to Bega’s consumer staple-based Branded portfolio, which enjoys strong market share positions in all product categories, we must see BGA demonstrate sustained evidence of earnings recovery/ stability before becoming more constructive on the stock in this challenging environment.
- We see no reason to fight the tape, although, on dips under $3, the stock does look like an interesting contrarian play.
MM is neutral to cautiously bullish on BGA
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