Analysts cheer fiscal 1Q profit growth at Sysco

NEW YORK - Wall Street analysts on Tuesday lauded food distributor Sysco Corp.'s ability to grow its profit despite a tough operating environment.

On Monday, the company said its fiscal first-quarter profit rose 4 percent. Revenue grew 5 percent during the period.

Barclays Capital analyst Meredith Adler said with the turmoil in the economy restricting spending, "there is no doubt that Sysco has been operating in a tough environment for some time."

Sysco supplies food to many restaurant companies which have been hit hard by slower consumer spending and falling guest traffic.

"What has become clear to us only recently is the strength of the business and the company's ability to manage through these difficult times," said Adler in a note to investors. "Sysco has been able to help existing customers, take business from competitors and improve efficiency and productivity for multiple quarters."

Even so, Adler said given expectations for a continued decline in the economy "we do not think the risk reward relationship is attractive at this time."

Adler has an "Equal Weight" rating on the stock with a $34 price target.

Citi Investment Research analyst Gregory R. Badishkanian said in a note to investors that the company's ability to grow profit was "encouraging" given the economic environment and that the company may be able to report "decent operating results over the next few quarters."

But he cut his target price to $30 from $39 based on the weak consumer environment.

Badishkanian has a "Buy" rating on the shares.

Sysco shares fell 3 cents to $25.44 in afternoon trading.

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