UBS sets Utz Brands stock rating at Neutral with $15 target

Wednesday saw UBS analyst Peter Grom initiate coverage on Utz Brands (NYSE:UTZ), issuing a Neutral rating and setting a price target of $15.00 for the company’s shares. The new price target indicates a potential upside of approximately 9% from the stock’s current level. According to InvestingPro data, analyst targets range from $15 to $20, with the stock currently trading at a P/E ratio of 74.2x. InvestingPro’s Fair Value analysis suggests the stock is currently fairly valued.

Grom’s assessment of Utz Brands, a company known for its portfolio of snack products, acknowledges the brand’s ability to continue gaining market share within the U.S. salty snacks sector. This optimism is attributed to the company’s strong performance and execution in its core markets, as well as its ability to expand distribution into new markets. The company has demonstrated consistent dividend growth, raising its dividend for 5 consecutive years, with a current yield of 1.8%. Want deeper insights? InvestingPro offers 8 additional key tips about UTZ’s financial health and growth prospects.

Despite these positive factors, the analyst expressed caution due to the broader industry challenges. The salty snacks category as a whole has seen a decline of 2.4% over the latest 13-week period. This trend aligns with UTZ’s recent performance, as InvestingPro data shows revenue declined by 2% in the last twelve months to $1.41 billion. Grom suggests that much of this downturn is cyclical rather than structural, but he also points out that the current state of the U.S. consumer market makes it unlikely that category trends will see significant improvement in the near future.

This tempered outlook on the category’s growth prospects is expected to limit the potential for Utz Brands’ shares to outperform market expectations. Nonetheless, the analyst believes that Utz Brands’ strong productivity measures and a more favorable cost environment could support the company’s bottom line.

In conclusion, while acknowledging Utz Brands’ operational strengths and market opportunities, UBS predicts that the stock will likely stay within a certain trading range until there’s greater clarity on the company’s top-line growth trajectory.

In other recent news, Utz Brands has been the subject of several analyst updates and financial assessments. RBC Capital Markets recently lowered its price target for Utz Brands to $20.00, maintaining an Outperform rating, after the company’s fourth-quarter revenue fell short of expectations due to sluggishness in the snack category. Similarly, DA Davidson reduced its price target to $16.00, maintaining a Neutral rating, as the company did not meet revenue expectations, despite showing growth in EBITDA. In contrast, Piper Sandler reaffirmed an Overweight rating with a $20.00 price target, expressing confidence in Utz’s potential for revenue and margin growth, and highlighting the company’s strategic plans for expansion and efficiency improvements.

TD Cowen downgraded Utz Brands from Buy to Hold, lowering the price target to $15.00, citing concerns about the salty snack category’s performance and a reduced likelihood of a buyout. Despite these challenges, Utz Brands’ management has outlined strategies to improve operational efficiency, with plans to save $150 million by 2026. The company is also focusing on expanding its geographical reach and increasing marketing investments. Analysts at Piper Sandler see Utz as a top pick in the food sector, noting the end of aggressive discounting by competitors as a positive development. These recent developments reflect a mixed outlook for Utz Brands, as analysts weigh the company’s growth potential against current market challenges.

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