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Investing.com -- TD Cowen downgraded Utz Brands to Hold from Buy and cut its price target to $15 on persistent weakness in the salty snack category, increased promotional pressure, and reduced likelihood of a near-term M&A.
The firm said category dynamics have become more challenging, driven by the expansion of GLP-1 weight loss drugs and cuts to SNAP benefits, which have weighed on demand.
TD Cowen noted that salty snack prices have climbed 34% since the pandemic, outpacing total food inflation of 25%, creating pressure for promotional activity.
“Our retail tracking data indicates that category sales are down -0.6% in the L52W, and UTZ is only slightly outperforming at +0.1%,” the analysts wrote, adding that they expect Utz to respond to increased discounting from Frito-Lay.
TD Cowen lowered its 2025 and 2026 organic sales growth forecasts for Utz to 2%, versus prior estimates of 3%, and said subdued growth, along with 3.6x debt leverage, limits valuation upside.
While Utz remains a potential acquisition candidate, the note said a deal is unlikely in the near term given that major players are currently focused on other priorities.
The new $15 price target implies a 13x forward EBITDA multiple, down from Utz’s 15x three-year average, which TD Cowen said reflects muted category growth and reduced M&A probability.