On Thursday, Piper Sandler adjusted its outlook on Utz Brands (NYSE:UTZ) shares by reducing the price target to $20 from the previous $24, while maintaining an Overweight rating on the company’s shares. Currently trading at $13.47, significantly below even the lowest analyst target of $17, the stock presents an interesting case for investors.
According to InvestingPro data, Utz has seen its share price decline by 14.49% over the past year. The revision comes as the firm updates its estimates based on current retail trends and maintains a positive view on the long-term prospects for the snack manufacturer.
In a recent statement, Piper Sandler analysts noted a slower momentum in U.S. measured retail sales affecting their fourth-quarter 2024 earnings estimates for Utz Brands. With current annual revenue of $1.42 billion and a gross profit margin of 34.34%, InvestingPro analysis reveals the company maintains a ’Fair’ overall financial health score, suggesting stable fundamentals despite recent challenges.
Despite this near-term adjustment, the firm remains confident in the company’s potential for 2025, citing expected improvements in organic growth driven by volume increases and expanded capacity, particularly in the kettle-cooked product line.
Utz Brands is seen as well-positioned to meet or exceed its three-year objectives, with anticipated growth in revenue and improved profit margins. The analysts believe that a more balanced promotional market will emerge in 2025, benefiting the company. Utz has also been recognized for its disciplined pricing strategy, avoiding temporary volume boosts through aggressive discounting.
The firm has adjusted its earnings per share (EPS) estimates for Utz Brands, bringing down the 2025 forecast from $0.83 to $0.81 and the 2026 estimate from $0.96 to $0.94. The reduction in the price target to $20 reflects a lowered earnings multiple from approximately 17.0 times to around 15.0 times, which accounts for potential uncertainties in promotional activities.
Piper Sandler’s reevaluation of Utz Brands’ stock price target to $20 from $24 aligns with a cautious approach to near-term retail dynamics while affirming a positive stance on the company’s growth trajectory in the medium to long term.
In other recent news, in the snack products sector, Utz Brands has declared an increase in its annual dividend, marking its fourth consecutive year of dividend increases. The company has also reported steady growth in its third quarter of 2024 earnings, despite facing a competitive market. Mizuho (NYSE:MFG) Securities adjusted its outlook on Utz Brands, lowering the price target to $21.00 from the previous $24.00, while maintaining an Outperform rating.
The full-year organic growth outlook was reaffirmed at 2% to 2.5%, with kettle production capacity expansion planned to start in Q1 2025. These are the recent developments in the respective companies.
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