What happens to stocks if AI loses momentum?
On Tuesday, JPMorgan analyst Ken Goldman adjusted the price target for BellRing Brands (NYSE:BRBR), reducing it to $80.00 from the previous $85.00, while maintaining an Overweight rating on the stock. The revision follows a significant drop in the company’s share value, which saw a 15% decline compared to a 1% dip in the S&P 500 index.
Goldman reiterated the Overweight rating post the stock’s retreat and subsequent discussions with BellRing Brands CEO Darcy Davenport, CFO Paul Rode, and their team. The analyst identified a couple of reasons for the decline in share price. Firstly, BellRing Brands did not raise its top-line guidance, marking a departure from its usual practice of increasing forecasts since the first quarter of 2023. Although management attributed this decision to macroeconomic uncertainties, it disappointed many investors who had expected a guidance raise. Despite these concerns, InvestingPro data shows the company has maintained impressive revenue growth of 21% over the last twelve months, with analysts forecasting 16% growth for fiscal year 2025.
Additionally, the third quarter was projected to be weaker than anticipated, with sales expected to grow at a low single-digit percentage, significantly below the consensus estimate of 13% growth. This downward revision was partly due to an unforeseen reduction in orders from multiple customers.
Goldman also pointed out the vulnerability of BellRing Brands’ stock prior to the decline. Factors contributing to the precarious position included a lopsided distribution of Buy/Overweight ratings by sell-side analysts, a high valuation with over 25 times next twelve months (NTM) enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), and a minimal level of short interest, which stood at 2.4% of the float, one of the lowest in JPMorgan’s coverage. InvestingPro analysis reveals 8+ additional key insights about BRBR’s valuation and growth prospects, available exclusively to subscribers through the comprehensive Pro Research Report, which provides deep-dive analysis of 1,400+ top US stocks.
In other recent news, BellRing Brands reported its second-quarter 2025 earnings, meeting analyst expectations with an earnings per share (EPS) of $0.53. The company slightly exceeded revenue forecasts, reporting $588 million against the anticipated $577.61 million. This marked a 19% year-over-year increase in revenue, indicating solid performance in the quarter. Despite these positive earnings results, the company’s stock experienced a decline of over 15% in after-hours trading, reflecting broader market concerns and specific issues such as potential tariff impacts and inventory adjustments.
BellRing Brands also announced the launch of new products, including the Premier Protein Indulgence line, which aims to capture new consumption occasions. The company maintains a strong market share of 27% in the ready-to-drink segment. BellRing’s adjusted EBITDA rose by 14% year-over-year, reaching $119 million, with a margin of 20.2%. The company’s guidance for full-year net sales is projected to be between $2.26 billion and $2.34 billion, reflecting a 13-17% increase.
Analysts from firms such as Barclays (LON:BARC) and Citi raised inquiries about potential impacts from tariffs on dairy protein inputs, which the company acknowledged as a future concern. Additionally, inventory destocking was addressed as a one-time event, not indicative of a broader consumption issue. The company continues to focus on innovation and expanding household penetration, with plans for further promotions and marketing campaigns in the coming quarters.
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