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Investing.com - Jefferies raised its price target on Scotts Miracle-Gro (NYSE:SMG) to $74.00 from $71.00 on Wednesday, while maintaining a Buy rating on the lawn and garden products company. This target aligns with InvestingPro analysis, which suggests SMG is currently undervalued, trading at $55.76 with analyst targets ranging from $62 to $90.
The stock remained relatively flat following the announcement, which Jefferies attributed to several factors including retailers ordering closer to their point-of-sale curve, resulting in a slower first half of fiscal 2026 for the company. SMG has experienced a challenging year, with YTD returns of -15.21% and trading 40% below its 52-week high of $93.90.
Jefferies noted potential investor scrutiny regarding SMG’s strategic de-emphasis of commodity categories, though the firm believes reallocating marketing dollars away from these segments will ultimately yield favorable returns. InvestingPro data shows SMG maintains a "GOOD" overall financial health score of 2.8, suggesting the company’s strategic decisions are on solid footing.
The investment bank highlighted strong gross margin gains expected in fiscal 2026, though these improvements may not be amplified by selling, general and administrative (SG&A) leverage on low-single-digit U.S. Consumer growth.
Jefferies expressed confidence that ongoing increases in advertising spending this year would support accelerating U.S. Consumer growth in fiscal 2027, with the firm viewing a scenario of increased advertising without corresponding volume growth as unlikely.
In other recent news, Scotts Miracle-Gro reported its fourth-quarter earnings for 2025, slightly exceeding earnings expectations with an earnings per share (EPS) of -$1.96, compared to the anticipated -$1.97. However, the company’s revenue came in below projections, reaching $387.4 million against the expected $396.2 million. Despite this revenue shortfall, Scotts Miracle-Gro highlighted its strategic initiatives and product innovations as potential drivers for future growth. These developments are part of the company’s ongoing efforts to enhance its market position. Investors and analysts are closely monitoring these initiatives as they could impact the company’s future performance. While the earnings report showed mixed results, the company’s focus on innovation suggests a forward-looking strategy. This news comes amidst a backdrop of varied investor reactions.
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