Guggenheim raises target amid limited refinancing pressure
Investment firm Guggenheim adjusted its target price for Sysco (NYSE:SYY) upward to $95.00 from $91.00 and maintained a Buy rating on the food distribution company. The new target sits modestly above Sysco's most recent trading level of $90.20, with shares trading close to a 52-week high of $91.40.
Refinancing profile central to outlook
Guggenheim highlighted Sysco's upcoming debt schedule as a primary consideration in the revision. The firm noted that approximately $3 billion of senior debt carrying sub-4% coupon rates is due to be refinanced over the next four to five years, and that about one-third of that amount falls in the near term. While refinancing from "generationally low interest rate levels" represents a headwind, Guggenheim expects any rise in annual interest expense to be modest and not to alter the company's earnings-per-share trajectory.
Alongside its target change, Guggenheim kept its earnings-per-share forecasts unchanged at $4.61 for fiscal 2026 and $5.08 for fiscal 2027. The firm projects nearly a 10% total shareholder return from current prices based on those estimates and the revised price objective.
Valuation and growth signals
InvestingPro analysis cited alongside Guggenheim's note suggests the stock may retain undervaluation despite its recent gains, with a Fair Value assessment implying further upside is possible. Guggenheim also pointed to what it described as a "somewhat unprecedented 22% relative year-to-date run" for Sysco versus the S&P 500, emphasizing that such outperformance increases the importance of delivering on targeted operational metrics, specifically 2.5%-plus local case growth in the second half of the fiscal year.
Earnings, revenue and credit action
Recent company results showed a second-quarter fiscal 2026 beat, with Sysco reporting earnings per share of $0.99 compared with a consensus expectation of $0.98. Revenue for the quarter came in at $21.0 billion, slightly above the anticipated $20.78 billion.
Credit rating activity has provided a contrasting signal. Moody's downgraded Sysco's long-term ratings, including its senior unsecured rating, to Baa2 from Baa1. The agency explained the move by pointing to a steady increase in debt since fiscal 2023 that has outpaced earnings growth, which led to Moody's-adjusted debt to EBITDA rising to 3.7x for the fiscal year ended June 2024 from 3.2x the prior year. Despite the downgrade, Moody's moved the rating outlook to stable from negative.
Bottom line
The combination of an upward price-target revision, unchanged EPS estimates and a recent earnings beat presents a mixed picture: Guggenheim views Sysco's refinancing requirements as manageable and maintains a constructive price target, while credit-rating pressure and rising leverage metrics underscore areas of investor focus. Execution on local case growth and the pace of future refinancing will be key observables going forward.