Shares of Lamb Weston Holdings, Inc. (NYSE:LW) saw a 2.75% drop on Friday amid questions surrounding the company's decision to release its fiscal 2025 second quarter results earlier than usual. Traditionally, Lamb Weston has announced its second quarter earnings in the first week of January. However, this year, the company is set to report on Thursday, December 19, 2024. The change in reporting schedule has raised curiosity, especially considering Lamb Weston's history of being in the crosshairs of activist investor Jana.
In anticipation of the earnings release, analysts have shared their perspectives on Lamb Weston's financial outlook. Bernstein SocGen Group's Alexia Howard expressed concerns about potential downside risks to the market's expectations for the next quarter. Howard predicts that Lamb Weston's gross margins may suffer due to higher inventory costs, negative price/mix in North America, and operational deleveraging. She anticipates that the company's gross margins could fall to 22.4%, compared to the consensus estimate of 24.5%. Additionally, Howard forecasts earnings per share (EPS) at $0.86, which is $0.19 lower than the consensus of $1.05.
TD Cowen's Robert Moskow also provided insights, suggesting a more cautious sales estimate for fiscal year 2025 that sits 0.5% below the consensus. Moskow's estimate is slightly under the midpoint of the company's guidance, reflecting concerns about the extent of market share gains management expects. While he anticipates in-line results for the second quarter, Moskow believes the third quarter consensus expectation of 11% is overly ambitious. He noted that while activist pressure may be pushing management to enhance performance, the projected pace of recovery might be too optimistic.
Investors and stakeholders are keenly awaiting the early earnings report to gain clarity on Lamb Weston's financial health and future prospects.
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