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On Monday, BofA Securities revised its price target for J.M. Smucker (NYSE:SJM) shares, reducing it to $118 from $124, while maintaining a Neutral rating on the stock. Currently trading at $103.28, near its 52-week low of $99.81, InvestingPro analysis suggests the stock is slightly undervalued. The adjustment comes in response to the unprecedented increase in green coffee prices, which recently surpassed $4 per pound for the first time, reaching a peak not seen since 1977.
BofA Securities analysts expect that coffee roasters, including J.M. Smucker, will attempt to transfer these heightened costs to consumers. Despite challenges, the company maintains strong fundamentals with revenue growth of 7.76% and a robust dividend history, having raised dividends for 15 consecutive years. This strategy is aimed at safeguarding earnings before interest and taxes (EBIT) dollars, but it may have repercussions on future pricing strategies, sales volumes, and EBIT margin percentages. For deeper insights into SJM’s financial health and more exclusive ProTips, visit InvestingPro. The firm’s projections for fiscal year 2026, which starts in May 2025, indicate that J.M. Smucker’s coffee segment will likely exhibit a revenue and margin profile similar to those seen in fiscal years 2012 and 2023, characterized by significant price contributions, volume reductions, and a marked decline in EBIT margin percentage.
The analysts have updated their earnings per share (EPS) estimates for fiscal years 2026 and 2027 to reflect these changes, incorporating the coffee futures curve into their assumptions. With 12 analysts recently revising earnings downward and current P/E ratio at 20.78, investors should note that InvestingPro offers comprehensive analysis through its Pro Research Report, available for SJM and 1,400+ other US stocks. Despite a notable difference in the composition of revenue and margin compared to their previous model, the expected Coffee EBIT for both years is approximately 2% lower. Consequently, the EPS forecast for fiscal year 2026 has been adjusted from $10.43 to $10.33, and for fiscal year 2027 from $11.32 to $11.21.
The new price objective of $118 is still founded on an 11-times multiple of the projected calendar year 2026 EPS. The analysts reiterated their Neutral stance on J.M. Smucker’s stock, indicating a cautious outlook in light of the current challenges faced by the coffee industry.
In other recent news, J.M. Smucker Company has made several noteworthy developments. The company reported strong performance for its second quarter, adjusting its full-year earnings per share (EPS) guidance to $9.90 at the midpoint. Despite flat sales anticipated for the third quarter, J.M. Smucker projects a full-year comparable growth of 1.5-3%, driven by equal contributions from volume mix and pricing adjustments.
In a recent revision, Citi analysts reduced their price target for J.M. Smucker from $137 to $126, while maintaining a Buy rating on the stock. This adjustment came ahead of the company’s upcoming fiscal third-quarter earnings report. The analysts anticipate a cautious tone from the company regarding the next fiscal year, citing factors such as coffee inflation and planned investments.
On the other hand, TD Cowen analysts downgraded J.M. Smucker stock from Buy to Hold, adjusting the price target to $121 from $130. This revision reflects concerns about the performance of the company’s acquired Hostess business and future challenges in the Pet segment. Despite this, the core business of J.M. Smucker is reported to be doing well.
These are among the recent developments for J.M. Smucker, with the company adjusting its EPS guidance amid mixed segment performance and analysts revising their outlook on the company’s stock.
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