Mizuho cuts BellRing Brands target to $75, keeps Outperform rating

On Wednesday, Mizuho (NYSE:MFG) Securities adjusted its outlook on BellRing Brands (NYSE:BRBR), reducing the price target from $85.00 to $75.00, yet retaining an Outperform rating on the stock. Currently trading at $61.01, the stock has retreated from its 52-week high of $80.67, though InvestingPro analysis indicates the company maintains a "GREAT" financial health score, suggesting strong fundamentals despite recent price movements. The firm’s analysis pointed out that BellRing Brands continues to demonstrate robust sales performance, with a notable increase in 4-week and 12-week sales by 18% and 28% respectively. This growth includes a significant rise in volume for Premier shakes, up by 12% over 4 weeks and 23.5% over 12 weeks, along with Total (EPA:TTEF) Distribution Points (TDP) climbing by 31% and 43% in the same periods. With a market capitalization of $7.75 billion and impressive revenue growth of 18.91% over the last twelve months, BellRing’s expansion strategy appears to be yielding results. For deeper insights into BellRing’s growth metrics and financial health, check out the comprehensive Pro Research Report available on InvestingPro.

The assessment also highlighted the contrast in performance within the company’s portfolio. Atkins, under the Simply Good Foods (SMPL) brand, faced a decline in 4-week and 12-week sales by 19% and 16%, including a 31% drop in bar sales. This downturn was attributed to announced shelf space reductions and a 23% decrease in TDPs. Despite these challenges, new products introduced in August have been contributing positively, maintaining around a 300 basis points accretion to brand sales, based on approximately 30% All Commodity Volume (ACV) compared to the total Atkins ACV of about 70%.

Furthermore, the Quest brand experienced a 5% and 8% increase in 4-week and 12-week sales, with the introduction of new Bake Shop products in August enhancing the brand’s sales by approximately 300 basis points. Quest’s ACV for the new products stands around 30%, in contrast to the brand’s overall ACV of roughly 85%. However, Quest bars saw a slight volume decrease of 1.1%. The report also noted that the new Overload bars are gaining distribution and are expected to make a more substantial contribution in the coming quarters.

Lastly, the analysis covered OWYN’s performance, which saw a 24% surge in 4-week sales, including a 16% increase in shake volume and an 18% rise in TDP. The sustained growth across various product lines, despite some setbacks, underpins Mizuho’s positive outlook on BellRing Brands’ stock. Trading at a PEG ratio of 0.55 and maintaining strong profitability metrics, the company shows promising value characteristics. InvestingPro subscribers can access 11 additional key insights and detailed financial metrics to make more informed investment decisions.

In other recent news, BellRing Brands has been the focus of several analyst evaluations and price target adjustments. Notably, DA Davidson upgraded the company’s stock rating from Neutral to Buy, setting a new price target of $85. This decision was influenced by the performance of BellRing’s Premier Protein products and the company’s strategic growth potential. Meanwhile, TD Cowen maintained a positive outlook on BellRing Brands but lowered its price target from $86 to $78, attributing the stock’s recent decline to temporary inventory adjustments rather than a drop in consumer demand.

Evercore ISI also revised its price target for BellRing Brands, reducing it from $90 to $82 while maintaining an Outperform rating. The adjustment is based on revised EBITDA estimates and increased expenses from marketing efforts. Despite the lower target, Evercore ISI remains optimistic about BellRing’s future sales and EBITDA growth. Similarly, Jefferies adjusted its price target to $80 from $86, reaffirming a Buy rating. Jefferies cited solid financial results and strong consumption trends, noting that the stock’s decline might overly discount the company’s prospects.

These developments reflect a mixed but generally positive sentiment among analysts regarding BellRing Brands’ market position and growth potential. Analysts have highlighted the company’s ability to navigate inventory challenges and leverage growth opportunities in its product category.

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