Bitcoin price today: slips below $113k, near 6-wk low despite Fed cut bets
On Friday, Bernstein analysts revised their outlook on J.M. Smucker (NYSE: SJM), reducing the price target to $104 from $124, while keeping a Market Perform rating on the stock. Currently trading at $105.17, InvestingPro analysis indicates the stock is fairly valued. The adjustment comes in response to rising coffee input costs, which have reached new heights since the company's investor day in mid-December.
J.M. Smucker, known for its diverse portfolio including coffee products, is particularly sensitive to fluctuations in coffee prices. The company generates approximately 30% of its sales and 38% of its segment profit from the coffee sector for the fiscal year 2024. With a solid dividend yield of 4.15% and a 15-year streak of dividend increases, as revealed by InvestingPro, the company has demonstrated financial resilience. Bernstein analysts note that J.M. Smucker typically employs hedging strategies for coffee, covering a span of four to six months.
The analysis by Bernstein suggests that if coffee represents about 24% of the cost of goods sold (COGS) for Smucker's coffee segment, the company would need to implement a price increase of around 10% to offset the additional input costs. However, if the price elasticity is 30% and coffee volumes decrease by 3% compared to current projections, this could lead to a 7% reduction in segment profit, potentially beginning in the early fiscal year 2026.
The detailed commentary from the Bernstein analyst, Alexia Howard, highlights the challenges faced by J.M. Smucker amid the volatile coffee market. Howard's analysis provides insight into the potential financial impact on the company's profitability due to the recent surge in coffee input costs.
Investors and stakeholders of J.M. Smucker are now equipped with Bernstein's latest projections as they consider the company's financial health in the face of rising coffee prices. The new price target reflects the anticipated effects on the company's coffee segment, which is a significant contributor to its overall performance. With the next earnings report due on February 27, InvestingPro subscribers can access comprehensive analysis including 6 additional ProTips and detailed financial metrics in the Pro Research Report, helping investors make more informed decisions during this volatile period.
In other recent news, J.M. Smucker has been the focus of several analyst adjustments and a recent earnings call. Jefferies revised its price target for the company from $123 to $114, maintaining a Hold rating. The firm highlighted mixed results across various segments, with robust growth in products like Uncrustables and Bustelo, but increasing pressures in other areas like Hostess and Pet.
BofA Securities also adjusted its price target for J.M. Smucker, reducing it to $118 from $124 due to a surge in coffee costs. The firm's analysts expect the company to attempt to transfer these heightened costs to consumers, which could impact future pricing strategies, sales volumes, and EBIT margin percentages.
Citi analysts reduced their price target for J.M. Smucker to $126 from $137, while maintaining a Buy rating. They anticipate that the company's earnings per share (EPS) for the third quarter will align with current projections, but noted potential risks to sales figures due to declining trends in various segments.
TD Cowen downgraded J.M. Smucker from Buy to Hold and adjusted the price target to $121 from $130 due to concerns about the performance of the company's acquired Hostess business and future challenges in the Pet segment.
In its second quarter earnings call, J.M. Smucker revised its full-year EPS guidance to $9.90 at the midpoint. The company anticipates flat sales in the third quarter, but projects a full-year comparable growth of 1.5-3%, driven by an equal contribution from volume mix and pricing adjustments.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.