Sysco Q3 report ‘missed a low bar,’ says Wells Fargo

Wells Fargo analyst Edward Kelly says Sysco’s (SYY) fiscal Q3 report “missed a low bar.” The company’s backdrop has softened, but its “operational issues remain a drag,” the analyst tells investors in a research note. Wells believes that while uncertainty is high, Sysco’s opportunity for an internal turnaround, the model’s resiliency, and the stock’s valuation warrants a continued Overweight rating. Nonetheless, the Q3 report came in worse than feared and the guidance cut points to further weakness ahead, the firm contends. Wells is “concerned,” but says the stock’s risk/reward keeps it “interested.” The firm adds that while Sysco’s peers Performance Food (PFGC) and US Foods (USFD) are not immune to the backdrop, their results “likely won’t be this bad.”