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On Friday, Bernstein analysts adjusted their outlook on Lamb Weston Holdings Inc . (NYSE: NYSE:LW), reducing the price target from $64.00 to $62.00 while maintaining a Market Perform rating. According to InvestingPro data, the stock has shown significant strength with a 10.29% return over the past week, despite analyst targets ranging from $60 to $82. Alexia Howard of Bernstein highlighted the company’s positive quarterly results and reaffirmed guidance for fiscal year 2025, despite noting that restaurant traffic remains soft. InvestingPro analysis suggests the stock is currently undervalued based on its Fair Value model.
Lamb Weston’s recent performance showed signs of recovery, with the company reaching a 90% utilization rate, a significant improvement after the challenges faced during last year’s ERP issues. With an overall Financial Health score of "GOOD" from InvestingPro, and a track record of raising dividends for 8 consecutive years, the company has demonstrated resilience. The company has been successful in regaining customers and is now testing with a new major U.S. account transitioning from hand cut to frozen fries, which could lead to further growth as freezer installations are completed.
Additionally, Lamb Weston’s new production facility in China is beginning to make an impact by focusing on local production, reducing the need to ship products from the United States. This strategic move is expected to bolster the company’s presence in the Chinese market.
Looking ahead, Lamb Weston is collaborating with AlixPartners to conduct a comprehensive review of its global supply chain. This initiative aims to identify and implement productivity enhancements across the company’s operations. According to Howard, this indicates significant potential for Lamb Weston to improve its efficiency and performance in the future.
In other recent news, Lamb Weston Holdings Inc. reported third-quarter earnings for fiscal year 2025, surpassing market expectations with an earnings per share (EPS) of $1.10, compared to the forecast of $0.89. The company also exceeded revenue forecasts, reporting $1.52 billion against the expected $1.5 billion. Despite these positive results, Stifel analysts adjusted their outlook on Lamb Weston, reducing the company’s price target from $68.00 to $63.00 and maintaining a Hold rating. This adjustment comes in the wake of Lamb Weston’s gross margin contraction by 530 basis points, attributed to lower capacity utilization and price investments.
Lamb Weston reaffirmed its financial outlook for fiscal year 2025, prompting Stifel to slightly increase its EBITDA forecast to $1.19 billion, an uptick of $16 million from the previous estimate. However, this revised projection anticipates a weaker contribution from Lamb Weston in the fourth quarter. Additionally, the company launched new products and expanded its brand portfolio, with executives optimistic about achieving $55 million in pretax savings for FY2025. The stock price movement was not addressed in this context, but the company’s strategic initiatives indicate a proactive approach to navigating industry challenges.
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