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Investing.com - DA Davidson analyst Brian Holland previewed Food Products stocks ahead of second-quarter earnings, identifying several companies that may perform well despite ongoing industry challenges. According to InvestingPro data, the sector shows mixed signals, with some companies maintaining strong financial health despite market pressures.
The analyst noted that multiples continue to contract across the sector as industrywide volumes remain soft, with trade, policy, and behavioral shifts potentially creating structural headwinds related to labor, sourcing, SNAP benefits, MAHA, and GLP-1 medications.
Holland pointed to acquisition activity as a potential offset to these challenges, specifically mentioning that Bellring Brands (NYSE:BRBR), Freshpet (NASDAQ:FRPT), and possibly Simply Good Foods (NASDAQ:SMPL) and Utz Brands (NYSE:UTZ) could be acquisition targets within the firm’s coverage universe. Simply Good Foods, currently showing an overall "GREAT" financial health score on InvestingPro, operates with moderate debt levels and maintains strong liquidity with a current ratio of 3.95. The company appears undervalued based on InvestingPro’s Fair Value analysis, with 12 additional ProTips available for subscribers.
The analyst also referenced breakup rumors surrounding Kraft Heinz (NASDAQ:KHC), suggesting that Campbell Soup (NYSE:NASDAQ:CPB) could potentially follow a similar strategy to the legacy Kellogg approach, though management has previously dismissed such possibilities.
DA Davidson identified Bellring Brands, Vital Farms (NASDAQ:VITL), and Utz Brands as their "best ideas" in the food sector, while also expressing optimism about Mariani Nut Company (NYSE:MZTI) heading into its earnings report.
In other recent news, The Simply Goods Group reported third-quarter 2025 results that exceeded expectations in some areas. Bernstein highlighted that the company achieved organic sales growth of 3.8%, surpassing the consensus estimate of 2.25%. However, the company adjusted its fiscal year 2025 guidance to the low end due to challenges such as cost inflation and tariff impacts. Mizuho (NYSE:MFG) lowered its price target for Simply Goods to $43, citing a reduction in adjusted EBITDA estimates for fiscal years 2025 and 2026. UBS maintained a Neutral rating and noted that Simply Goods’ fiscal year 2025 outlook was moved to the lower end of its guidance range. DA Davidson also reiterated a Neutral rating, observing a deceleration in the OWYN brand’s performance. TD Cowen reduced its price target to $34, pointing to distribution losses affecting Atkins sales in fiscal year 2026. Despite these challenges, Simply Goods’ Quest and OWYN brands show potential for growth through innovation and distribution expansion.
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