The banana is one of the most popular items in the world, evidenced by its ranks as the best-selling product at Walmart (WMT). And Dole (DOLE) is one of the most recognizable “brand” of bananas on the market.
The stock gained 5.47% to $14.45 in pre-market hours after announcing it signed an agreement with Itochu Corporation for the sale of Dole’s worldwide packaged foods and Asia fresh produce businesses for $1.685 billion in cash. The company further announced the cash proceeds will go towards lowering its debt and the costs of reorganizing its business. But shares quickly took a dive after the market opened.
Meanwhile, this morning the stock’s “buy” rating was reiterated by equities research analysts at Bank of America (BAC ) in a research note issued to investors. They currently have a $15.00 price target.
Dole Food Co. has built a steady stream of revenue from the banana. Its growing popularity in Japan has helped increase earnings and although the banana is still a staple in rushed North American breakfasts, prices have declined in that last year. In 2007, lawsuits over chemicals used to grow bananas saddled Dole with debt.
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Bananas are just one segment of Dole’s growing fresh fruit business that makes up almost 70% of its revenue. Dole has made a serious effort to build its banana stand into a full fruit offering, the focus of its business. It has discontinued its fresh-cut flowers business and is moving away from vegetables and packaged goods. Recent acquisition of blueberry farm SunnyRidge has boosted their berry division alongside an overall focus on wholesome foods including the popular fruit cups.
Written by Freda Ding