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Janney Montgomery Scott Initiates Coverage on The J.M. Smucker Company (SJM) with a Buy

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January 27, 2009 10:47 AM EST

Janney Montgomery Scott initiates coverage on The J.M. Smucker Company (NYSE: SJM) with a Buy. Price target $53.

Janney analyst says, "Our positive outlook is based on four factors: 1) We expect the company’s acquisition of Folgers coffee to have a significant positive impact on margins, earnings, and free cash flow that will provide incremental growth in both FY09 and FY10; 2) The company’s portfolio of number one brands are less susceptible to private label encroachment and most of the company’s core categories are already over-indexed to private label; 3) SJM’s product portfolio is strongly weighted to cooking/baking at home. We believe the cook at home trends will continue to show strength during this recession, providing a solid foundation for organic sales and volume growth; and 4) We believe the Folgers acquisition will enable the company to show increasing returns on invested capital, a metric positively correlated to above average stock performance."

The J.M. Smucker Company is engaged in manufacture and marketing of branded food products on a worldwide basis.