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Why Middleby Shares Jumped 10% Today

By Anders Bylund – Updated Jun 29, 2020 at 4:29PM

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The leading maker of restaurant-grade ovens, deep fryers, and ventilation systems rose on the wings of a bullish analyst report.

What happened

Shares of restaurant equipment maker Middleby (MIDD 0.09%) 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.

A green charting arrow crashes upward through the ceiling.

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.

Selim Bassoul, former CEO, chairman, and president of Middleby, serves as Chief Innovator at The Motley Fool. Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Middleby. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Middleby Corporation Stock Quote
The Middleby Corporation
MIDD
$123.99 (0.09%) $0.11

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