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On Thursday, Bernstein analysts reiterated their positive stance on McCormick & Company (NYSE:MKC) shares, maintaining an Outperform rating and a $101.00 price target. The firm’s outlook is based on the anticipation of a reformulation supercycle in the U.S. packaged foods industry, which they believe could significantly benefit McCormick and other flavor companies.
McCormick management, during the first quarter 2025 earnings call on Tuesday, acknowledged an uptick in activity around product reformulation. This development comes in the wake of RFK Jr.’s advocacy for the removal of artificial colors, preservatives, and other additives from packaged foods in the United States. The company also noted potential efforts to reduce sodium and added sugar levels. With a 39-year track record of consecutive dividend increases and a current yield of 2.23%, McCormick demonstrates strong shareholder returns amid industry changes.
Bernstein analysts draw parallels to a similar trend about 15 years ago when consumer concerns about artificial ingredients led to widespread changes in food formulations. They suggest that the industry may be at the beginning of another such cycle, spurred by recent and sudden attention to these issues.
The analyst’s comments highlight the potential for McCormick to capitalize on this shift as manufacturers look to adapt their products to meet changing consumer preferences and regulatory pressures.
McCormick’s stock price target of $101.00 by Bernstein reflects confidence in the company’s ability to navigate and benefit from the anticipated reforms in the industry. The company’s recent acknowledgment of increased reformulation activity aligns with Bernstein’s thesis of an emerging supercycle that could drive growth for flavor companies.
In other recent news, McCormick & Company reported mixed results for the first quarter of 2025, with a 2% increase in organic sales and a 20 basis point expansion in gross margin. Despite this, earnings per share fell short of some analysts’ estimates. Argus downgraded McCormick’s stock from "Buy" to "Hold," citing concerns over rising input costs and increased brand marketing spending, which may constrain earnings growth. Meanwhile, Bernstein raised its price target for McCormick to $101, maintaining an "Outperform" rating, as they anticipate improved profit growth in the upcoming quarter. TD Cowen adjusted their price target to $90 while keeping a "Buy" rating, highlighting robust volume growth despite earnings falling short of expectations. Stifel reaffirmed their "Hold" rating with an $82 price target, noting McCormick’s solid revenue growth and profitability. Additionally, McCormick’s CEO, Brendan Foley, acknowledged an increase in reformulation efforts among customers, aligning with industry trends toward healthier options. These developments reflect McCormick’s ongoing efforts to navigate market challenges and adapt to evolving consumer preferences.
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