United Natural Foods: Balancing Improved EBITDA with Low-Margin Reliance and Structural Pressures

BMO Capital analyst Kelly Bania maintained a Hold rating on United Natural Foods (UNFI – Research Report) yesterday and set a price target of $32.00.

Kelly Bania has given her Hold rating due to a combination of factors affecting United Natural Foods. The company’s recent financial performance showed improvements, with a notable beat in adjusted EBITDA for F2Q25 driven by stronger sales and effective expense management. Despite these positive results, there are concerns about the company’s heavy reliance on low-margin sales from Whole Foods, which could pose challenges to sustainable growth.
Additionally, while the company has raised its free cash flow expectations and is making progress in stabilizing EBITDA, there are ongoing structural pressures within its customer base outside of Whole Foods. The muted sales growth in the natural category, excluding Whole Foods, further underscores these challenges. Given these mixed signals, Bania maintains a cautious outlook, reflected in the Hold rating, with a price target of $32, aligning with pre-COVID valuation multiples.

UNFI’s price has also changed dramatically for the past six months – from $14.510 to $24.570, which is a 69.33% increase.