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J. M. Smucker (SJM) Looks Interesting At This Trough Valuation With Growth Ahead - Citi

June 8, 2018 9:43 AM EDT
Get Alerts SJM Hot Sheet
Price: $141.26 --0%

Rating Summary:
    4 Buy, 13 Hold, 5 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 8 | Down: 10 | New: 15
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Citi analyst, David Driscoll, reiterated his Buy rating on shares of J.M. Smucker (NYSE: SJM) but cut his price target to $127 from $155 after the company experienced continued pressure from the fourth quarter pet food recall and incremental coffee promotional dollars drove much of another quarterly miss. The 4Q miss then impacts F2019, and was also impacted by higher investment needs (advertising up +$85m, $20m more than prior discussion), lower expected cost savings (now $80, -$20m from prior), and a higher than expected tax rate (24.5%, +150bps).

That said, the analyst is looking through the near term pressure stating "SJM’s stock was already washed out with valuation near its 15 year low (abs PE and rel PE to SP500). Further in F2019, SJM expects to grow organic revenues by +2%, maintain gross margins, and drive positive earnings growth, all of which suggests SJM is moving in a positive direction. We see the stock’s valuation as near a bottom, but with positive growth ahead and exciting new brands launching (1850, Jif Power-ups)"

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 $100.80 yesterday.



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