Truist cuts Flowers Foods price target to $20, maintains hold

On Friday, Truist Securities revised its price target for Flowers Foods (NYSE:FLO) shares, lowering it to $20.00 from the previous $23.00, while keeping a Hold rating on the stock. The company, currently trading near its 52-week low of $18.90, has shown modest revenue growth of 1.52% over the last twelve months. Truist analysts cited the company’s latest financial results and guidance, noting that while there were no significant surprises, the prospect of another year with only modest sales growth did not particularly stand out for investors. According to InvestingPro data, two analysts have recently revised their earnings expectations downward for the upcoming period.

Flowers Foods, known for its bakery products, is seen by Truist Securities as being in a strong position with its assortment of healthier brand options, especially as the market for white bread continues to shrink. The company has maintained a strong dividend track record, having raised dividends for 11 consecutive years, with a current attractive yield of 4.96%. Despite this advantage, white bread still constitutes a significant portion of Flowers Foods’ business. The analysts highlighted that to draw more investor interest, the company would likely need to achieve at least low single-digit (LSD) top-line growth, not accounting for the additional week in this year’s financial calendar. InvestingPro subscribers can access 6 additional key insights about Flowers Foods’ financial health and growth prospects.

The Hold rating suggests that Truist Securities believes Flowers Foods’ stock might not see significant price movement in the near term and that investors should maintain their current positions without adding more shares. Trading at a P/E ratio of 16.96x and maintaining strong liquidity with current assets exceeding short-term obligations, the new price target of $20.00 reflects a more conservative valuation of the company based on the expected sales performance.

Flowers Foods’ financial performance and growth prospects are critical factors for analysts when setting price targets and ratings. The current assessment by Truist Securities indicates that while the company is strategically aligned with health trends, the overall growth pace is less than what might excite the market.

Investors and potential shareholders of Flowers Foods will likely monitor the company’s ability to adapt and possibly accelerate growth in a changing food industry landscape. The updated price target from Truist Securities will serve as a reference point for the market as Flowers Foods continues its operations throughout the year.

In other recent news, Flowers Foods reported its Q4 earnings, which exceeded analyst expectations, although its revenue fell short. The company’s adjusted earnings per share for the fourth quarter were $0.22, surpassing the analyst consensus of $0.21. However, the revenue of $1.11 billion was below the projected $1.13 billion. Year over year, net sales saw a decrease of 1.6%, primarily due to volume declines.

For the full fiscal year 2024, Flowers Foods saw a marginal increase in net sales by 0.2%, amounting to $5.103 billion. The company’s adjusted EBITDA rose by 7.3%, reaching $538.5 million, which accounted for 10.6% of net sales.

Looking ahead, Flowers Foods has provided guidance for fiscal year 2025, expecting net sales to range between $5.403 billion and $5.487 billion, indicating a growth of 5.9% to 7.5% compared to the previous year. The adjusted diluted EPS is forecasted to be between $1.11 and $1.24. The company anticipates the results for the first half of 2025 to benefit from new business wins and savings initiatives, whereas the latter half of the year is expected to face commodity cost headwinds and challenging category trends.

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