J.M. Smucker stock rating initiated at Outperform by RBC Capital

Investing.com - RBC Capital initiated coverage on J.M. Smucker (NYSE:SJM) with an Outperform rating and a price target of $130.00 on Monday, representing a potential 25% upside from the current price of $104.08.

The research firm believes SJM’s current valuation is "washed out" and presents a positive risk-to-reward profile, suggesting the market has embedded a long-term growth rate that is too conservative. According to InvestingPro data, the company’s current market valuation appears fair, with a moderate EV/EBITDA ratio of 8.74x and an attractive dividend yield of 4.15%.

RBC Capital highlighted that J.M. Smucker is implementing initiatives to stabilize and eventually transform Hostess into a growth contributor, though it acknowledged this process would take "a few more quarters."

The firm specifically pointed to Uncrustables as a "brand super-story" with significant upside potential that is not currently reflected in the company’s valuation.

RBC Capital described its recommendation on J.M. Smucker as "effectively a second derivative call," indicating the investment thesis relies on improvements in growth trajectory rather than current performance.

In other recent news, J.M. Smucker reported better-than-expected fourth-quarter earnings due to stronger gross margins and lower selling, general, and administrative expenses, although organic sales growth was weaker. Despite this, the company’s fiscal year 2026 guidance fell short of analyst expectations, leading UBS to lower its price target from $129 to $115 while maintaining a Buy rating. TD Cowen also reduced its price target from $121 to $105, citing challenges with the Hostess acquisition and coffee segment profitability, while maintaining a Hold rating. DA Davidson kept its Neutral rating and $126 price target, noting trade and policy uncertainties as factors affecting the company’s outlook. Additionally, J.M. Smucker announced plans to eliminate FD&C artificial colors from its consumer food products by the end of 2027, with changes affecting sugar-free fruit spreads, ice cream toppings, and certain Hostess products. The company aims to stop selling products containing these colors to K-12 schools by the 2026/2027 school year. Bernstein further reduced its price target to $94 from $104, expressing concerns over the Hostess brand’s performance and potential headwinds from weight loss drugs and ultra-processed food consumption.

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