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On Monday, DA Davidson reaffirmed its Neutral stance on Kellanova shares (NYSE:K), maintaining the price target at $83.50. The firm’s analyst, Brian Holland, noted that Kellanova’s first-quarter earnings for 2025 surpassed expectations, a feat considered less significant due to the absence of future earnings guidance and largely attributed to reduced selling, general and administrative expenses (SG&A) following the announcement of the company’s acquisition by Mars.
Holland’s commentary highlighted that the earnings beat was driven by lower overhead costs post the acquisition news. He also pointed out a slowdown in organic net sales, which mirrors a broader trend of softness observed across the industry. Despite the better-than-expected earnings per share (EPS) for the first quarter, the analyst emphasized the importance of being cautious due to the lack of forward-looking guidance from Kellanova.
The maintained price target of $83.50 aligns with the proposed acquisition price from Mars, indicating that DA Davidson sees the current valuation as fair in the context of the pending takeover. The analyst’s comments suggest that the acquisition has had a notable impact on the company’s financials, particularly in terms of reduced operational costs.
Kellanova’s performance in the first quarter reflects broader industry challenges, yet the company managed to post an earnings beat owing to decreased overhead. The reaffirmed Neutral rating and price target by DA Davidson indicate a wait-and-see approach in light of the acquisition by Mars and the current industry environment.
Investors are keeping a close watch on Kellanova’s stock as the acquisition by Mars progresses, with the DA Davidson price target serving as a benchmark for the stock’s performance in the near term. The firm’s neutral position suggests that they are advising caution until the effects of the acquisition and industry trends become clearer.
In other recent news, Kellanova reported first-quarter earnings and revenue that did not meet analyst expectations. The company posted adjusted earnings per share of $0.90, falling short of the consensus estimate of $1.01. Revenue was reported at $3.08 billion, below the projected $3.18 billion and marking a 2.5% decrease compared to the previous year. Despite these results, Kellanova’s CEO highlighted strong top-line growth driven by emerging markets and the snacks division. Meanwhile, Stifel analysts maintained a Hold rating on Kellanova shares, with a price target of $83.50, amidst the ongoing acquisition process by Mars™, expected to conclude in the first half of 2025. Kellanova’s organic revenue saw a modest increase of 0.7%, primarily due to pricing strategies, although overall volume declined by 2.5%. The company’s gross margin contracted by 80 basis points, attributed to higher costs and an unfavorable divisional mix. Without financial guidance from Kellanova, Stifel revised its full-year 2025 EPS estimate to $3.75, reflecting the first-quarter shortfall and anticipated weaker volumes.
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