Limoneira Company (LMNR) PT Raised to $28 at B.Riley

B.Riley raised its price target on Limoneira Company (NASDAQ: LMNR) to $28.00 (from $24.00) while maintaining a Buy rating.

The analyst commented: "Buy-rated Limoneira Company reports 3Q24 (Jul) results on 9/9 AMC, expecting in-line revs./adj. EBITDA of $66.3M/$12.7M versus the Street at $63.6M/$12.7M. On its 2Q call, LMNR displayed better lemon pricing from excess rain in California that had delayed harvest into 3Q, setting the quarter to have much higher lemon and avocado sales. LMNR had also reiterated lemon guidance of 5M-6M cartons for the year and raised avocado guidance from 7M-8M lbs to 9M-10M lbs due to LMNR’s favorable California avocado holdings and a seasonal lack of competition from Mexico and Peru. We expect LMNR to have sold 7M lbs of Avocados in the quarter, setting the year to be a record ~9.8M lbs in production. LMNR has been exiting unprofitable lemon farming areas, fallowing land, and monetizing the water rights. With favorable avocado supply-demand dynamics likely to persist for several more years, mgmt. has embarked on cutting back lemon farming in favor of adding another 1,000 acres of avocados, leading it to increase its run-rate EBITDA projection for FY30 from $30M per year to $45M-$55M per year. Harvest had recently closed an additional 554 home sites and got approvals to increase the total number of entitled lots by 550, or 37%, increasing the total cash flow projection over the next seven years by 46%. Harvest also received $15M (its 50% share of JV) in cash proceeds in 3Q. Mgmt. has discontinued efforts to sell certain non-strategic assets, such as Chile production assets and a vineyard in Paso Robles, pending a conclusion of the strategic review process. We expect LMNR to conclude its strategic review process soon and announce its decision on the direction it takes in selling the farmland, the lemon packing and shipping operations, and its Harvest JVs in full or in parts. We are maintaining Buy with a raised PT from $24 to $28, reflecting an intrinsic valuation of at least $35 to be realized in full or in part through a possible transaction in the near term."

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