Bernstein maintains J.M. Smucker stock at Market Perform

On Friday, Bernstein SocGen Group maintained its Market Perform rating on J.M. Smucker (NYSE:SJM) with a steady price target of $104.00, while the stock currently trades at $109.14. According to InvestingPro data, three analysts have recently revised their earnings estimates downward for the upcoming period, with analyst targets ranging from $104 to $135. The firm’s analysis highlighted mixed results in the company’s third quarter of fiscal year 2025, noting a slight decrease in sales growth. Organic sales saw a 1% decline compared to a 2% increase in the previous quarter. The dip was attributed primarily to supply issues in the Pet Food segment, which are now resolved. Bernstein anticipates a modest uptick in organic sales growth in the following quarter.

J.M. Smucker reported revenues of $2.186 billion, falling short of consensus estimates by 1.8%. The organic sales year-over-year decrease of 1% was influenced by a combination of a 3% increase in price and a 5% decline in volume/mix, underperforming against a consensus expectation of 0.7% growth. Despite recent challenges, InvestingPro analysis shows the company maintains strong dividend credentials, having maintained dividend payments for 55 consecutive years, with a current yield of 3.96%. This marked a deceleration from the 2% organic sales growth seen in the prior quarter, which had been driven by a 1% rise in price and a 2% improvement in volume/mix.

Despite the revenue miss, J.M. Smucker’s adjusted earnings per share exceeded expectations, supported by robust margins and a lower tax rate. Bernstein’s reiteration of the Market Perform rating and the $104 price target reflects a slight adjustment in the valuation multiple from 9.3x to 9.1x. This change is due to the ongoing uncertainties in the coffee commodity markets, which have led to a revised EBITDA forecast for the next 12 to 24 months, decreasing from $2,109 million to $2,093 million. InvestingPro analysis indicates the stock is currently slightly undervalued, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of SJM and 1,400+ other US stocks.

In other recent news, J.M. Smucker reported mixed third-quarter earnings for fiscal year 2025, with earnings per share (EPS) exceeding expectations at $2.61, compared to a forecast of $2.36. However, the company fell short on revenue, posting $2.19 billion against an anticipated $2.23 billion. The revenue miss is attributed to challenges in the Sweet Baked Snacks segment and a $20 million reduction in Hostess portfolio expectations. Additionally, J.M. Smucker recorded an $800 million goodwill write-down and a $200 million impairment charge related to the Hostess acquisition, reflecting ongoing challenges in that segment.

Jefferies and CFRA analysts both adjusted their price targets for J.M. Smucker, with Jefferies lowering it to $111 and CFRA to $126, while maintaining a Hold rating. These adjustments reflect concerns over J.M. Smucker’s high leverage and underperformance in certain segments, despite positive growth in brands like Uncrustables and Cafe Bustelo. The company also revised its full-year sales guidance downward, citing supply disruptions in the Pet segment and reduced orders from Hostess.

J.M. Smucker’s management remains committed to its long-term growth strategy, aiming for at least 4% growth in its strategic brand sales. Despite the setbacks, the company plans to make additional investments to support its brands and address challenges in the Hostess segment. The company’s coffee business continues to perform well, even amid record-high coffee prices. Analysts and investors are closely monitoring how J.M. Smucker addresses these issues and whether its strategic initiatives will lead to improved financial performance.

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