What happened

Shares of restaurant equipment maker Middleby (NASDAQ:MIDD) rose almost 10% on Monday thanks to a bullish analyst report.

So what

KeyBanc Capital Markets analyst Jeffrey Hammond upgraded Middleby to overweight early Monday morning. The firm placed a $90 price target on the stock, 23% above Friday's closing price. Hammond cited "mounting evidence" that the market for restaurant equipment bottomed out in early April, setting the company up for a solid recovery from that point. Under these circumstances, Middleby looks undervalued at 14 times forward earnings and 11 times free cash flows.

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Image source: Getty Images.

Now what

Middleby's stock has nearly doubled from March's 52-week lows, but investors have a long way to go before reclaiming the yearly peak at $143 per share. I am inclined to agree with Hammond's assessment here, as Middleby is working with a solid financial safety net. The company had $381 million of cash on hand at the end of March and generated strong bottom-line profits as well as positive free cash flow in the COVID-vexed first quarter.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.