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Investing.com -- Jefferies upgraded JM Smucker Company (NYSE:SJM) to Buy from Hold, saying that the recent pullback in the stock overstates near-term challenges tied to Hostess and coffee elasticity, while undervaluing the company’s broader growth potential.
“While we understand investor concern, we think fiscal 2026 may have been de-risked,” analysts wrote, adding that Smucker’s portfolio remains better positioned than many peers, even as Hostess struggles.
The firm said SJM’s fiscal 2026 outlook appears conservative. Retail data shows no volume impact despite recent double-digit price hikes.
Jefferies lowered its 2026 and 2027 earnings estimates by about 13% and 8%, respectively, but raised its price target to $115 from $110, valuing the stock at approximately 11 times forward earnings.
That implies a roughly 30% discount to the broader food peer group, wider than the 15-year average of 25%.
The firm acknowledged that the Q4 results were soft, with management citing tariff-related costs, higher marketing spend, and weaker Sweet Baked Snacks (SBS) expectations, together posing an EPS headwind of about $1.55.
Still, Jefferies sees mid-single-digit organic sales growth as encouraging, particularly as SBS is expected to make up just 10% of total sales going forward.
Smucker also took a $2 billion write-down related to Hostess, nearly half the value it paid for the business.
Jefferies noted the path to stabilization may be long, but said the company’s valuation now more reflects Hostess-related concerns than the total portfolio’s prospects.
With shares trading near 20-year P/E lows, the analysts wrote, “we believe the market is under-appreciating SJM’s relatively advantaged org growth potential with a portfolio that in our view is a bit less exposed to headwinds facing many center-store peers.”