Dairy and soy products industry leader Dean Foods Co. (DF) saw its stock jump 3% on Friday after analysts at investment bank J.P. Morgan issued a bullish note on the firm’s growth prospects. The team of analysts upgrading shares of the Dallas-based company from neutral to overweight for first time since 2010.

Along with the positive rating, J.P. Morgan hiked its price target on shares of the multinational food and beverage giant from $20 to $22, compared to the stock’s closing price of $19.31 on Friday.

Analyst Notes Lower Dairy Costs

Morgan highlighted lower dairy costs and margin positive sales from conventional milk as factors presenting upside for Dean Foods in the upcoming period. The stock upgrade was also attributed to the shares’ “appealing valuation.”

Last month, Dean Foods saw its stock fall on weak fourth-quarter results and lower-than-expected profit forecasts, partially blamed on softened demand for milk and increased investment in an organic milk joint venture. In the most recent fourth quarter, Dean Foods posted its eighth consecutive period with flat revenue growth, posting quarterly sales of $2.02 billion. The maker of Dairy Pure and TruMoo milk joins peers in struggling with milk volume down 1.2% year over year (YOY) in the fourth quarter, according to USDA data. Further, the company says its joint venture with CROPP, the largest independent organic farmer cooperative, will be only “minimally” accretive in 2017.

On average, analysts maintain a one-year price target estimate of $20.17 on shares of Dean Foods, reflecting an approximate 4.6% upside. Trading at a price of $19.28 on Monday afternoon, DF stock represents a 14% increase YOY. Despite forecasting a 20% inflation rate in the dairy commodity space and a 1% decline in total volume performance over last year, Dean Foods hopes to invest in long-term growth through strategic initiatives and brand building. (See also: Dairy Producers Seek Crackdown on 'Fake' Products.)

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