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On Monday, RBC Capital Markets adjusted its outlook on Utz Brands (NYSE:UTZ) shares, reducing the price target to $20.00 from the previous $23.00 while maintaining an Outperform rating on the stock. The revision comes after Utz Brands reported a fourth-quarter revenue that fell short of market expectations, a situation attributed to overall sluggishness in the category and consumers’ increasing preference for value. According to InvestingPro data, the stock has seen a significant 25% decline over the past year, though analysts maintain a consensus bullish rating with price targets ranging from $16 to $20.
Utz Brands, known for its branded salty snacks, has been navigating a challenging external environment, which has impacted its performance less than anticipated. Despite these challenges, RBC analysts noted that Utz Brands continues to deliver solid results in its core product area and is experiencing strong share performance across its product portfolio. With annual revenue of $1.41 billion and an EBITDA of $129.92 million in the last twelve months, the company maintains a solid market position. InvestingPro subscribers can access detailed financial health scores and 10+ additional expert insights about Utz Brands’ performance and valuation metrics.
The company’s ability to withstand near-term pressures is seen as a testament to its resilience. RBC remains confident in Utz Brands’ unique growth story, highlighting the company’s potential to capitalize on specific growth drivers unique to its business.
In explaining the decision to lower the price target, RBC cited "prolonged category/consumer headwinds" but reiterated confidence in the company’s long-term prospects. This adjustment reflects a cautious yet optimistic view of Utz Brands’ ability to navigate a tough market while still offering potential for growth.
In other recent news, Utz Brands reported its fourth-quarter earnings for 2024, exceeding expectations with an earnings per share (EPS) of $0.22 compared to the forecasted $0.20. However, the company fell short of revenue expectations, reporting $341 million against the anticipated $354.8 million. Despite the revenue miss, Utz Brands remains focused on productivity improvements and plans to achieve $150 million in productivity gains from 2024 to 2026. DA Davidson, an analyst firm, recently adjusted its outlook on Utz Brands, reducing the price target from $18 to $16 while maintaining a Neutral rating. Analyst Brian Holland noted that while Utz Brands has shown growth in EBITDA, it has not met revenue expectations, reflecting a cautious stance towards the broader snacking sector. The firm’s Neutral rating indicates a level of uncertainty regarding the company’s future performance, particularly in relation to the broader food and snacking industry’s valuation trends. Utz Brands is also targeting an 80 basis point expansion in EBITDA margins in 2025, with plans to expand distribution and optimize its supply chain network.
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