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Investing.com - Morgan Stanley (NYSE:MS) has reiterated its Equalweight rating and $36.00 price target on The Simply Goods Group (NASDAQ:SMPL), currently trading at $32.34, following the company’s fiscal third-quarter earnings report. According to InvestingPro data, the stock is trading near its 52-week low of $31.25, having declined 17% year-to-date.
The Simply Goods Group reported earnings per share that exceeded expectations, with gross margin and EBITDA upside, while sales were in line with consensus estimates. Despite the positive quarterly performance, the company narrowed its fiscal year 2025 guidance to the low end of its previously stated range. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 4.27, indicating robust liquidity, while achieving 11.47% revenue growth in the last twelve months.
Retail takeaway for the quarter showed solid growth of 3% year-over-year, with Quest brand products increasing by 11% and OWYN products growing by 24%. The Atkins brand, however, declined by 13%, though Morgan Stanley noted this decrease was not unexpected.
The research firm highlighted a sharp deceleration in OWYN takeaway growth, which slowed to 24% from 52% in the second quarter. This slowdown, while not entirely surprising given recent scanner trends and previous management comments, was described as "somewhat disappointing" when combined with management’s updated expectations.
Morgan Stanley expects near-term estimates to be revised lower, but noted the stock has already underperformed recently and its valuation remains low, while suggesting the fourth-quarter implied EBITDA outlook may be viewed as conservative. Based on InvestingPro’s Fair Value analysis, the stock appears undervalued at current levels. Subscribers can access 6 additional ProTips and a comprehensive Pro Research Report, which provides deeper insights into SMPL’s valuation and growth prospects.
In other recent news, The Simply Good Foods Group reported its third-quarter fiscal 2025 results, showing a quarterly EBITDA of $73.9 million, surpassing Stifel’s estimates by $0.7 million. The company experienced a 3% growth in retail takeaway, with the Quest and OWYN brands achieving 11% and 24% growth, respectively, while Atkins saw a 13% decline. The company adjusted its fiscal year 2025 guidance, now projecting sales growth between 8.5% and 9.5%, down from the previous 8.5% to 10.5% range. Stifel maintained a Buy rating for Simply Good Foods but lowered its price target to $38 due to weakening consumption trends and risks of distribution losses for the Atkins brand. Citi also reduced its price target to $40, anticipating a slight sales miss for the third quarter, though it maintained a Buy rating. DA Davidson lowered its price target to $38, citing challenges such as cost inflation and the optimization of the Atkins brand, while retaining a Neutral rating. Additionally, Simply Good Foods announced Christopher J. Bealer as the new Chief Financial Officer, effective July 3, 2025, and amended its Executive Severance Plan. These developments reflect the company’s efforts to navigate a challenging market environment.
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