KeyBanc Starts J.M. Smucker (SJM) at Sector Weight

KeyBanc initiates coverage on J.M. Smucker (NYSE: SJM) with a Sector Weight rating. Analyst Brett Andress pointed out limited visibility.

"Our more neutral stance is driven by reduced visibility into FY17 around competitive headwinds in the dry dog food business (compounded by the cycling of recent distribution gains) and lapping of the successful Dunkin' K-Cup introduction (driving nearly half of FY16's coffee EBIT growth), partially offset by what remains a favorable coffee input cost environment. That said, looking forward we do see upside to SJM's current synergy/profitability targets for the pet business, which should emerge as a meaningful driver of long-term earnings power given its compelling industry dynamics," said Andress.

"Trading at 12.4x our discounted FY18E EBITDA (~25% premium to its historical range), we would look for either a more attractive entry point or better earnings upside visibility to get more constructive on the name," added the analsyt.

For an analyst ratings summary and ratings history on J.M. Smucker click here. For more ratings news on J.M. Smucker click here.

Shares of J.M. Smucker closed at $127.93 yesterday.

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