J.M. Smucker stock target cut to $126 by CFRA

On Thursday, CFRA analyst Arun Sundaram announced a reduction in the price target for J.M. Smucker (NYSE:SJM) shares, adjusting the figure downward to $126 from the previous $131 while maintaining a Hold rating on the stock. Sundaram cited several reasons for the adjustment, including a lowered earnings per share (EPS) forecast for fiscal year 2026, which now stands at $10.47, down from $10.92. However, the EPS estimate for fiscal year 2025 has been slightly increased to $10.10 from $9.98. According to InvestingPro data, the company has maintained dividend payments for 55 consecutive years and currently offers a 4% dividend yield, demonstrating strong shareholder returns despite market challenges.

The new price target is based on a 12 times multiple of the projected FY 26 EPS, aligning with the current average of J.M. Smucker’s peers but remaining below the company’s historical average multiple of 15 times. This valuation reflects concerns over J.M. Smucker’s high leverage, with net debt to adjusted EBITDA at 3.3 times, and persistent challenges within its Hostess brand segment. InvestingPro’s analysis indicates the company’s current debt-to-equity ratio stands at 1.11, while its Financial Health Score remains FAIR, suggesting balanced risk factors. For deeper insights into SJM’s valuation metrics and peer comparison, investors can access the comprehensive Pro Research Report available on InvestingPro.

J.M. Smucker reported mixed results for the third fiscal quarter ending in January. The company’s adjusted EPS rose by 5% year-over-year to $2.61, surpassing expectations by $0.24. However, sales fell short, with a 2% year-over-year decline to $2.186 billion, missing targets by $39 million. This shortfall was attributed primarily to supply chain disruptions in the Pet segment, which have since been resolved, and a decrease in Hostess net sales by 8% year-over-year.

While the company has experienced setbacks, including the need to revise its sales outlook due to the third-quarter supply chain issues and the underperformance of Hostess, there have been positive developments. Notably, brands like Uncrustables and Cafe Bustelo continue to demonstrate robust growth. Despite these bright spots, the disappointing performance following the Hostess acquisition raises concerns among investors regarding the company’s future acquisition strategy.

In other recent news, J.M. Smucker Company reported its third-quarter earnings for fiscal year 2025, showing mixed results. The company exceeded earnings per share expectations, posting $2.61 against a forecast of $2.36, but fell short on revenue, reporting $2.19 billion compared to the anticipated $2.23 billion. The company faced challenges in its Sweet Baked Snacks segment, contributing to the revenue miss, and recorded an $800 million goodwill write-down and a $200 million impairment charge related to the Hostess acquisition. J.M. Smucker revised its full-year sales guidance downward, attributing this to the revenue shortfall and reduced expectations for the Hostess portfolio. Despite these challenges, the coffee business showed resilience, with the company planning additional pricing actions in response to high coffee costs. Analyst firms like Barclays (LON:BARC) and JPMorgan engaged with the company on its outlook, noting potential improvements in the Pet segment and better-than-expected performance in the coffee portfolio. The company remains optimistic about the Hostess acquisition, with CEO Mark Smucker expressing confidence in its long-term prospects.

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