Hostess Brands initiated with a Neutral at UBS

UBS initiated coverage of Hostess Brands with a Neutral rating and $26 price target. The company operates an "advantaged portfolio," competing in the high growth sweet baked goods category with a dominant share position, the analyst tells investors in a research note. However, the firm believes the pace of Hostess’ share gains are likely to moderate as key competitors improve their service levels and begin to increase their promotions. With shares trading at a 30% premium compared to its three-year average relative to the S&P 500, it prefers to wait for a more attractive entry point.