Morgan Stanley sets Simply Goods stock at Equalweight with $36 target

On Monday, Morgan Stanley (NYSE:MS) initiated coverage of The Simply Goods Group (NASDAQ: SMPL) with an Equalweight stock rating and a price target of $36.00. The firm’s analysts see potential in the company due to strong performance in its Quest and Owyn brands and believe there is an opportunity for the Atkins brand to stabilize. With a market capitalization of $3.3 billion and a solid financial health score rated as "GOOD" by InvestingPro, the company operates with moderate debt levels and maintains strong liquidity.

The Simply Goods Group has been recognized for its exposure to favorable market categories, and Morgan Stanley’s analysis suggests that the company’s current brand momentum is likely to persist. The analysts anticipate that the Quest and Owyn brands will continue to drive growth for the company. This outlook is supported by the company’s impressive 9% revenue growth over the last twelve months and a healthy gross profit margin of 39.3%.

In terms of the Atkins brand, Morgan Stanley sees a chance for improvement over time, although they acknowledge that the visibility into the brand’s trajectory is not clear. The assessment of risk versus reward leans towards a positive outlook, with an approximate 25% upside to Morgan Stanley’s $42 bull case scenario. Conversely, the downside risk is estimated at around 17% to their $28 bear case projection. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations, with the RSI indicating oversold territory.

Despite the optimistic scenarios outlined, the mixed potential drivers of the stock’s performance have led Morgan Stanley to maintain an Equalweight stance at present. The $36 price target reflects this cautious optimism, suggesting that while there is confidence in the company’s brand performance and market position, there are also factors that warrant a balanced view.

The Simply Goods Group’s stock is now being closely watched by investors as it navigates through the opportunities and challenges identified by Morgan Stanley’s analysts. The market will continue to monitor the company’s progress, especially in relation to the Quest and Owyn brands, and any developments regarding the Atkins brand stabilization efforts.

In other recent news, Simply Good Foods Co has amended its credit agreement to secure lower interest rates on its loans. The company’s strategic move reduces the rate for SOFR-based Initial Term Loans from 2.50% to 2.00% and ABR-based Initial Term Loans from 1.50% to 1.00%, enhancing financial flexibility. Additionally, the company announced the upcoming retirement of its CFO, Shaun P. Mara, on July 3, 2025, with Christopher J. Bealer set to succeed him. Bealer, who has extensive experience in consumer goods, will join as Senior Vice President of Finance on April 1, 2025. In financial market news, TD Cowen analyst Robert Moskow maintained a Hold rating on Simply Good Foods’ stock, adjusting the price target to $36.00. Meanwhile, Bernstein SocGen Group raised its price target to $47.00, maintaining an Outperform rating, citing better-than-expected margins and EPS. The company’s first-quarter results showed mixed performance, with a 10% rise in Quest sales and significant growth in the OWYN brand. Despite challenges with the Atkins brand, Simply Good Foods is seen to benefit from the popularity of high-protein, low-carb foods.

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