Piper Sandler has maintained a positive stance on Utz Brands (NYSE: UTZ), reiterating an Overweight rating and a $22.00 price target for the company's stock.
The firm's analyst highlighted Utz's potential to meet or exceed its three-year goals, citing expected top-line growth and margin improvements.
The optimism is supported by sustainable distribution gains across various geographies and channels, with new contracts already contributing to shipments.
Utz Brands, known for key products like Zapp's and Boulder Canyon, is seeing an uptick in brand investment, with a projected 60% increase in brand spending for 2024.
Although the promotional environment presents challenges, these are deemed manageable, and recent trends suggest a roughly 2 percentage point acceleration in sales gains over the latest four-week period compared to the previous timeframe.
Despite a positive outlook, Piper Sandler made slight adjustments to its 2024 estimates for Utz Brands. The firm decreased its forecast for 2024 organic sales growth from 2.8% to 2.1%, reflecting the impact of promotional pressures observed in July.
Additionally, the estimated earnings per share (EPS) for 2024 were slightly reduced from $0.73 to $0.72. Nevertheless, these revisions have not affected the firm's confidence in the stock, as the $22 price target remains unchanged.
In other recent news, Utz Brands has announced a regular quarterly cash dividend and an additional cash dividend for its shareholders. The company has also revised its 2024 financial outlook, expecting organic net sales growth to be between 2% and 2.5%.
Despite this adjustment, Utz has maintained its projections for other key financial metrics. Analyst firm Piper Sandler maintains an Overweight rating on Utz, expressing confidence in the company's potential to meet its financial goals.
In leadership changes, Utz has seen the retirement of Michael W. Rice from its board of directors, with William B.J. Werzyn Jr. stepping in to fill the vacancy. The company reported mixed results for its second quarter of 2024 but remains optimistic about future growth.
InvestingPro Insights
Piper Sandler's continued optimism about Utz Brands is reflected in some key metrics and insights provided by InvestingPro. With a market capitalization of approximately $2.49 billion, Utz is positioned as a notable player in the snack industry. The company's commitment to shareholder returns is evident, as it has raised its dividend for four consecutive years, a testament to its financial health and management's confidence in its business model. This aligns with Piper Sandler's view of the company's potential to meet or exceed its three-year goals.
InvestingPro Tips reveal that analysts expect Utz's net income to grow this year, which supports the analyst's perspective on the company's top-line growth and margin improvements. Furthermore, Utz's liquid assets exceeding short-term obligations suggest a stable financial footing, allowing for the increased brand investment highlighted in the article.
InvestingPro Data shows that while the company's revenue growth has slightly declined by 0.36% over the last twelve months as of Q2 2024, the gross profit margin remains robust at 33.36%. Additionally, the company's dividend yield stands at 1.34%, which could be appealing to income-focused investors.
For readers interested in a deeper dive into Utz's financial health and future prospects, InvestingPro offers additional tips on the company's valuation multiples, debt levels, and profitability forecasts. At the time of writing, there are 10 more InvestingPro Tips available for Utz Brands, which can provide a more comprehensive understanding of the company's investment potential. These insights can be accessed at https://www.investing.com/pro/UTZ, offering valuable information for investors considering Utz Brands as part of their portfolio.
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