MGPI - MGP Ingredients attracts bull rating from Wells Fargo with secular tailwinds in place

Wells Fargo started off coverage on MGP Ingredients Inc. ( NASDAQ: MGPI ) with an Overweight rating.

The firm thinks MGPI's premiumization strategy and sustained category momentum positions it deliver upside to guidance this year, with a strong earnings algorithm ahead.

"We believe the shares offer growth at a reasonable valuation, with attractive attributes for the current environment: domestic, secular tailwinds, and margin expansion."

Wells Fargo assigned a price target of $126 to MGPI based on a 25X P/E multiple and 17X EV/EBITDA multiple. While both metrics are noted to be above the 3-year historical average, they are only slightly ahead of the 5-year average. The Wells analyst team said a modest premium to core U.S. Beverage Alcohol group median is warranted after giving credit to the company for sustained sales/profit growth momentum and a diversified portfolio.

MGPI rose 0.43% in early trading on Monday.

The Seeking Alpha Quant Rating on MGPI is Hold with strong marks for momentum and revisions being offset by a low mark for valuation.

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