US stock futures flat after Wall St drops on Trump tariffs, soft jobs data
On Thursday, TD Cowen maintained a Hold rating on Simply Good Foods Group (NASDAQ:SMPL) with a consistent price target of $36.00. The firm's analyst highlighted the company's solid performance, noting that Simply Good Foods' second-quarter organic growth of 4.4% surpassed consensus expectations, and EBITDA increased by 18%, aided by the delayed impact of higher cost inventory. According to InvestingPro data, the company maintains excellent financial health with a "GREAT" overall score, though it trades at a relatively high P/E ratio of 25.65x.
Management at Simply Good Foods confirmed their fiscal year 2025 guidance, indicating that while they anticipate a $5-10 million headwind from tariffs, they plan to reinvest in marketing should these tariffs be lifted. The analyst from TD Cowen pointed out that the strength in the Quest and OWYN brands is being counterbalanced by ongoing distribution losses in the Atkins brand. Despite these challenges, InvestingPro analysis shows the company maintains strong fundamentals with a healthy current ratio of 4.27 and robust revenue growth of 11.47% over the last twelve months.
The $36 price target set by TD Cowen reflects a 12.5x enterprise value to EBITDA (EV/EBITDA) multiple based on the firm's 12-month forward EBITDA estimate. This multiple is notably lower than the company's historical average of 16x. The analyst's decision to maintain the Hold status is primarily due to the persistent declines in the Atkins brand, despite the company's overall positive results.
Simply Good Foods' reaffirmation of its long-term guidance and its ability to navigate tariff challenges while still investing in brand marketing has been acknowledged by TD Cowen. The current price target suggests that the analyst firm sees limited upside potential for the stock, based on the anticipated headwinds and valuation multiples.
In other recent news, The Simply Good Foods Company reported strong earnings for the second quarter of fiscal year 2025, with adjusted earnings per share of $0.46, surpassing analysts' expectations of $0.41. The company's revenue reached $359.7 million, showing a 15.2% year-over-year increase, driven by organic growth and contributions from new products. Mizuho (NYSE:MFG) maintained its Outperform rating and $45 price target, highlighting Simply Good Foods' strong revenue performance amid industry challenges. Bernstein also raised its price target to $48, citing better-than-expected earnings results and a consistent fiscal year 2025 guidance. DA Davidson, however, kept a Neutral rating with a $35 price target, noting the company's impressive performance but expressing caution regarding its current valuation. The Simply Good Foods Group continues to benefit from innovations and distribution strategies, particularly with its Quest and OWYN brands, which are contributing to sustained sales growth. The company has also managed to reduce its financial leverage significantly since acquiring OWYN, with net leverage now at 0.7 times. These developments reflect a positive outlook for Simply Good Foods, supported by strategic measures and market positioning.
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