Citi cuts J.M. Smucker stock price target to $126, retains buy rating

On Monday, Citi analysts adjusted their outlook on J.M. Smucker (NYSE:SJM) shares, reducing the price target to $126 from the previous $137, while maintaining a Buy rating on the stock. Currently trading near its 52-week low at $103.28, the stock has declined 6.21% year-to-date. The revision comes ahead of the company’s scheduled appearance at the CAGNY Conference on February 19 and its fiscal third-quarter earnings report set for February 25. According to InvestingPro, 12 analysts have recently revised their earnings expectations downward for the upcoming period.

Citi’s analysis indicates expectations for J.M. Smucker’s earnings per share (EPS) to align with current projections for the third quarter. However, there is perceived risk to sales figures due to declining trends in various segments. Despite these challenges, InvestingPro data shows the company maintains strong fundamentals with a 4.18% dividend yield and an impressive 55-year streak of consistent dividend payments. Analysts suggest that the company’s full-year earnings guidance for fiscal 2025 might be refined to center around the current range’s midpoint, contrasting with the previous two years’ adjustments towards the higher end.

The upcoming fiscal report is not expected to include specific guidance for fiscal 2026 or detailed commentary on the third-quarter performance. Nonetheless, Citi anticipates a potentially cautious tone from the company regarding the next fiscal year, citing factors such as coffee inflation, decelerating growth in product demand, and planned investments.

J.M. Smucker’s shares have experienced a downturn in line with the broader food industry sector. Citi analysts believe that the market may have already accounted for some of the anticipated risks. Based on InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels. However, they caution that modestly reduced future estimates could potentially cap any short-term gains in the stock’s performance. Discover more insights and 6 additional ProTips for SJM in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, J.M. Smucker Company has seen a mix of developments. TD Cowen analysts have downgraded the company’s stock rating to Hold, citing concerns about the performance of the recently acquired Hostess business and future challenges in the Pet segment. The downgrade was influenced by insights suggesting that the Hostess business, which had benefited from temporary factors such as government subsidies and increased snacking during the pandemic, might not maintain the same level of performance. Furthermore, J.M. Smucker’s Pet business segment is considered less stable due to a loss of scale and anticipated challenging comparisons in the future.

Meanwhile, the company has reported a robust performance for its second quarter and adjusted its full-year earnings per share (EPS) guidance to $9.90 at the midpoint. Despite anticipating flat sales in the third quarter, J.M. Smucker projects a full-year comparable growth of 1.5-3%, driven by an equal contribution from volume mix and pricing adjustments. TD Cowen also adjusted its forecast for J.M. Smucker’s fiscal year 2026 earnings per share (EPS) to $10.50, slightly below the consensus estimate of $10.56, aligning with the analysts’ expectations of the need for reinvestment to stabilize the company’s performance.

These recent developments provide investors with a snapshot of J.M. Smucker’s current financial landscape and the challenges and opportunities that lie ahead.

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