Citi Raises Sysco (SYY) Price Target Slightly, Flags Ongoing Execution Risk

Sysco Corporation (NYSE:SYY) is included among the 15 Best Consistent Dividend Stocks to Buy Right Now.

On April 2, Citi raised its price recommendation on Sysco Corporation (NYSE:SYY) to $73 from $72. It reiterated a Neutral rating on the shares. The firm updated its model to include Jetro. It also said it continues to see execution risk.

On March 30, Reuters reported that Sysco had agreed to acquire catering supplier Jetro Restaurant Depot in a $29 billion deal. The move is intended to expand Sysco’s reach among price-conscious independent restaurants. The company said it plans to fund the deal with $21 billion in new and hybrid debt, along with $1 billion in cash and equity. Jetro Restaurant Depot operates a wholesale cash-and-carry model, where customers pay upfront for goods such as food, beverages, and takeaway containers.

This approach complements Sysco’s existing delivery network, which serves restaurants, hospitals, and hotels. The deal would also give Sysco access to a higher-margin segment. Restaurant Depot operates around 166 warehouse locations across 35 U.S. states. Under the terms, Restaurant Depot shareholders will receive $21.6 billion in cash and 91.5 million Sysco shares, valued at about $7.5 billion based on Friday’s close. That would leave them with roughly a 16% stake in the combined company.

Sysco Corporation (NYSE:SYY) sells, markets, and distributes food products to restaurants, healthcare and educational facilities, lodging establishments, and other customers that prepare meals away from home. It also provides a range of non-food items and operates across U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Other segments.

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