NEW YORK — Credit Suisse has initiated coverage of Sovos Brands, giving the packaged foods company a rating of outperform and setting a target share price of $17. Sovos Brands began trading on the Nasdaq on Sept. 23 and closed at $13.52 that day. The price closed at $14.17 on Oct. 15.

Sovos Brands, which specializes in acquiring growth brands, currently includes the premium brands Rao’s, noosa, Michael Angelo’s and Birch Benders. Credit Suisse said the stock price should move higher as the market gets to know the company better, adding consumers developing a finer appreciation for packaged foods that mimic restaurant-quality experiences while eating at home will benefit Sovos.

Credit Suisse, a global investment bank and financial services company with a US office in New York, expects Sovos’ sales growth to level off at a top-tier rate of 8% in 2022 and 2023 after growing at a 23% pace over the past four years. Fixed cost leverage from strong sales, $18 million of savings from identified productivity projects through 2023 and ongoing revenue management improvements should provide tailwinds and drive margin to Sovos’ long-term guide of 18% to 20%. Pro forma sales rose to $609 million in 2020 from $374 million in 2018. Credit Suisse projects sales to reach $700 million in 2021, $757 million in 2022 and $819 million in 2023.

In a “blue sky” scenario, which would involve sales growing to a greater degree than expected and margins expanding at a greater degree than expected, the Sovos share price could reach $22, according to Credit Suisse. In a “grey sky” scenario, which would involve the Rao’s brand reaching saturation faster than expected or line extensions failing, the share price could fall to $12.

Sovos will seek to acquire brands with products made from simple, high-quality ingredients that support premium pricing. These kinds of brands over-index with young, family-oriented consumers who have high disposable income, according to Credit Suisse. All four brands owned by Sovos Brands have opportunities to grow as they had low household penetration rates for the 52-week period ended June 13, according to data from IRI, a Chicago-based market research, cited by Credit Suisse.

Rao’s pasta sauce, which features a 175% price premium to the category average, was at 9.6% household penetration. Rao’s ranks No. 3 in the pasta sauce category even though it has less than half as many points of distribution at retail as the top three competitors. While the Rao’s brand already is found in pasta sauce, pizza sauce, dry pasta, frozen entrees and ready-to-serve soup, it could expand into frozen pizza and salad dressing, according to Credit Suisse.

Noosa yogurt, a premium, full-fat yogurt brand made with whole milk, was at 7.8% penetration. The brand, already in spoonable yogurt and drinkable yogurt, could expand into frozen novelties and ice cream.

Michael Angelo’s frozen entrees contains no artificial ingredients or preservatives. The brand was at 4.9% penetration.

The Birch Benders brand was at 2.9% penetration. Already in pancake and waffle mixes, frozen waffles, baking mixes, and frosting, Birch Benders could expand into ready-to-eat baked foods, refrigerated baking and spoonable yogurt.

Todd Lachman, chief executive officer of Sovos Brands, has put together a strong executive team, drawing personnel with work experiences at Crocs, WhiteWave Foods, Kraft Heinz and Poppi, according to Credit Suisse.