Overview
Piper Sandler revised its stance on US Foods Holding Corp, moving the stock from Overweight to Neutral on Friday. At the same time, the firm lifted its 12-month price target to $103.00 from $85.00, a level that sits just above US Foods’ most recent trading price of $101.98 and very near its 52-week high of $102.13.
Valuation and technical signals cited
The research house framed the rating change as a "valuation driven and Risk-Reward based decision" rather than a critique of the company’s strategic trajectory. Piper Sandler pointed to InvestingPro data showing US Foods trading at a price-to-earnings ratio of 30.59, and noted that relative strength index readings imply the shares are in overbought territory after a 12.9% jump in the prior week. Those factors underpinned the brokerage’s conclusion that the current risk-reward profile no longer supported an Overweight recommendation.
Modeling constraints
Even after the firm incorporated its initial fiscal year 2028 estimates and pushed forward its long-term valuation framework sooner than it typically would, Piper Sandler said it was unable to justify extending its model assumptions further. That modeling limit contributed to the decision to downgrade the stock while simultaneously increasing the one-year target price.
Management and recent results
Piper Sandler’s note made clear the downgrade does not reflect a negative view of management, which the firm described as "excellent." The timing of the rating change followed US Foods’ release of fourth-quarter fiscal 2025 results and an update to guidance for fiscal year 2026.
In its fourth-quarter fiscal 2025 report, US Foods posted adjusted earnings per share of $1.04, outpacing the consensus estimate of $1.01 by 2.97%. Revenue for the quarter was $9.8 billion, which missed the expected $9.94 billion by 1.41%.
Contract win highlights ongoing business activity
Separately, a US Foods branch in Lexington, South Carolina, secured a $603 million contract to supply food and beverage products to U.S. military services. The contract was awarded by the Defense Logistics Agency Troop Support in Philadelphia following a competitive bidding process that drew three bids.
Contextual note
The downgrade reflects a balancing of updated financial estimates, technical market signals, and valuation metrics. Piper Sandler’s assessment emphasises that while operational performance and management quality remain positive, the share price and valuation metrics constrain the firm’s recommendation.