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On Tuesday, Jefferies analyst Rob Dickerson updated his outlook on McCormick & Company (NYSE:MKC), raising the price target to $98 from the previous $90 while maintaining a Buy rating on the stock. Dickerson’s assessment highlights McCormick’s advantageous position in the market, particularly within meal-related categories.
McCormick & Company, known for its spices, seasoning mixes, and condiments, is poised to gain from increased consumer interest in meal preparation and a growing demand for diverse flavors. The analyst underscored the company’s potential to outperform its competitors in the center-of-store aisles, citing long-term strategies that appear more credible.
Despite McCormick’s strengths, its shares are currently trading at only about a 7% premium compared to their five-year average relative to the Food group. However, InvestingPro analysis suggests the stock may be trading above its Fair Value, with a P/E ratio of 28.32x and a YTD return of 10.43%. Dickerson believes this undervalues the company’s future prospects against its peers. InvestingPro subscribers have access to 8 additional key insights about McCormick’s valuation and financial health.
The new price target of $98 is based on approximately 28.5 times Jefferies’ 24-month forward earnings per share (EPS) estimate for McCormick. The firm’s confidence in the company is reflected in the reiterated Buy rating, suggesting that McCormick’s stock holds a favorable outlook for growth.
Investors and market watchers will likely keep an eye on McCormick’s performance in the coming months, as the company continues to navigate the dynamic food industry landscape.
In other recent news, McCormick & Company reported a 6% decline in earnings per share (EPS) to $0.80 for the fourth quarter, though this figure surpassed both Stifel’s and the consensus estimates. The company’s organic sales rose by nearly 2%, driven by volume growth despite a slight negative impact from pricing strategies. Analysts from Bernstein maintained an Outperform rating for McCormick, setting a price target of $95, while TD Cowen affirmed a Buy rating with a $90 target, citing strong performance in the Consumer division. Stifel, however, reduced its price target to $82, maintaining a Hold rating due to a conservative sales growth forecast for 2025.
Additionally, McCormick announced that board member Patricia Little will retire at the next annual stockholders’ meeting in March 2025. The company is navigating challenges in its Flavor Solutions division, particularly in China and the U.S. and EMEA regions, where restaurant traffic and snack sales are weak. Despite these challenges, McCormick is focusing on faster-growing categories within the Flavor Solutions segment. The company has set ambitious growth targets from 2023 to 2028, aiming for a 3-4% compound annual growth rate in organic sales and a 9% EPS CAGR. McCormick’s management remains committed to achieving an 18% operating margin by 2028 and is prepared to reinvest in growth opportunities as they arise.
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