J.M. Smucker (SJM) PT Lowered to $131 at CFRA

CFRA analyst Arun Sundaram lowered the price target on J.M. Smucker (NYSE: SJM) to $131.00 (from $137.00) while maintaining a Hold rating.

The analyst comments "We cut our 12-month target to $131 from $137, 13x our FY 25 (Apr.) EPS of $10.07 (cut from $10.16; FY 26 set at $11.27) vs. the 16x long-term mean. FQ4 (Apr-Q) adj-EPS of $2.66 (flat Y/Y) beat by $0.33 on sales of $2,206M (-1% Y/Y), $38M below consensus. Investments in Uncrustables will likely weigh on EPS growth in FY 25. Yet, FY 26 has the potential to be an above-algorithm year, due to momentum in brands such as Uncrustables, Meow Mix, and Milk Bone, along with cost savings, Hostess synergies, lower interest expense, and less stranded overhead related to last year's dog foods divestiture. In FY 25, organic sales will likely grow about 3%, driven by about 1% pricing (SJM is raising coffee prices) and 2% volume/mix. It is rare for packaged food companies to see volume/mix strength in this consumer spending environment. Risks include elevated debt (leverage ratio is 4.9x), a rising promotional environment, and ongoing softness in key categories, such as coffee, peanut butter, and spreads. We remain at Hold."

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