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Investing.com - DA Davidson has reiterated its Neutral rating on The Simply Goods Group (NASDAQ:SMPL) with a price target of $38.00. The stock, currently trading at $32.28, has declined 17% year-to-date and sits near its 52-week low of $30.46, though InvestingPro analysis suggests the stock is currently undervalued.
The research firm noted that Simply Goods’ third-quarter 2025 results exceeded expectations for adjusted EBITDA of $269.53M, with a healthy gross margin of 37.62% and strong liquidity demonstrated by a current ratio of 3.95, despite a slight miss in net sales for its OWYN brand.
Simply Goods management has reduced the high end of its implied fourth-quarter guidance, which DA Davidson believes is partly due to deceleration in the OWYN brand performance.
The firm anticipates Simply Goods will reduce its fiscal year 2026 outlook to below algorithm, citing several factors including Atkins optimization, cost inflation, tariffs, and potentially OWYN brand challenges.
DA Davidson expects Simply Goods shares to remain range bound or move lower as consensus estimates for fiscal year 2026 are revised downward, though the firm indicated it might consider a more constructive stance if forward estimates are further de-risked and valuation becomes more discounted.
In other recent news, The Simply Good Foods Group reported third-quarter results that exceeded analyst expectations, with EBITDA reaching $73.9 million, a 3% year-over-year increase. Organic sales grew by 3.8%, driven by significant gains in its Quest and OWYN brands, which saw consumption growth of 11% and 24% respectively. However, the company adjusted its fiscal year 2025 guidance to the lower end of its previously stated range due to ongoing challenges with its Atkins brand, which declined by 13%. Stifel maintained its Buy rating with a $38.00 price target, acknowledging strong brand performance but noting increased margin pressure. Meanwhile, TD Cowen lowered its price target to $34.00, citing slower-than-expected fourth-quarter performance and anticipated distribution losses for Atkins in fiscal year 2026. Morgan Stanley (NYSE:MS) reiterated its Equalweight rating and $36.00 price target, highlighting the company’s positive quarterly performance but noting a slowdown in OWYN’s growth. The Simply Good Foods Group also faces challenges with declining international sales and a contraction in gross margin by 350 basis points. Despite these mixed results, analysts from Stifel and Morgan Stanley suggest that the company’s valuation remains low, with potential for future growth in its Quest and OWYN brands.
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