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J.M. Smucker (NYSE:SJM) shares fell sharply after UBS lowered its price target to $115 from $129 while maintaining a Buy rating on the stock. The price target reduction follows the company’s fourth-quarter results and fiscal year 2026 guidance announcement on Tuesday. According to InvestingPro data, the stock is now trading near its 52-week low of $93.93, with technical indicators suggesting oversold conditions.
The food manufacturer reported better-than-expected fourth-quarter earnings, with stronger gross margins and lower SG&A expenses offsetting weaker organic sales growth. Despite the quarterly beat, the company’s initial fiscal 2026 guidance disappointed investors, with bottom-line projections falling "well short of Street estimates" despite stronger projected top-line growth.
J.M. Smucker also reduced its long-term growth target for its Hostess brand to 3% from the previous 4% target. This adjustment raised investor concerns about whether even the revised outlook is achievable, according to UBS’s analysis.
The market reaction was severe, with SJM stock dropping 16% on Tuesday, significantly underperforming the Consumer Staples Select Sector SPDR Fund (XLP), which remained relatively flat. UBS characterized the magnitude of the sell-off as "more outsized" than expected.
UBS maintained its Buy rating despite the price target reduction, noting that management has embedded "somewhat conservative assumptions" in their outlook with "ample flexibility." The firm believes the Tuesday sell-off was "somewhat overdone" and sees a "favorable upside/downside skew from current levels," though it acknowledges investors may take a "wait and see approach" until the company demonstrates its updated outlook is achievable. InvestingPro calculations suggest the stock is currently undervalued, with additional analysis revealing a notable 4.51% dividend yield and an impressive 55-year track record of consistent dividend payments. For deeper insights into SJM’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, J.M. Smucker has faced several analyst adjustments following its fiscal year 2026 guidance and performance issues. TD Cowen lowered its price target to $105.00 from $121.00, maintaining a Hold rating, due to disappointing earnings guidance projecting earnings per share between $8.50 and $9.50, below analyst expectations of $10.25. The firm cited challenges with the Hostess acquisition and the coffee segment as contributing factors. DA Davidson also maintained a Neutral rating with a $126.00 price target, highlighting significant headwinds and macroeconomic pressures affecting the company. Bernstein reduced its price target to $94.00 from $104.00, expressing concerns over Hostess brand performance and potential headwinds from GLP-1 weight loss drugs and ultra-processed foods consumption. Stifel analysts also lowered their price target to $106.00 from $120.00, noting stronger-than-expected fourth-quarter results but ongoing challenges in the Sweet Baked Snacks segment. The guidance for fiscal year 2026 indicates an 11% decline in earnings per share, with Stifel reducing its estimate to $8.95. These developments reflect broader concerns over J.M. Smucker’s ability to navigate current market and segment challenges.
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