Jefferies analyst Rob Dickerson lowered the price target on Lamb Weston (NYSE: LW) to $80.00 (from $85.00) noting the cloud hovering over the company should be at least somewhat lifted given incremental cost-driven color, GM guidance, and revisions that should put numbers in a rational place off which growth can occur.

The analyst reiterated a Buy rating, stating "Mgmt. stated that the cost pressures and supply chain tightness are transitory, and we agree; we just need such costs (esp. labor) to ease for the value unlock to occur. With prices moving higher and incremental pricing possible combined with likely easing costs in the out years and improved productivity savings from Win as One, getting to pre-pandemic margins or higher isn’t a matter of if, but rather when. Given our conversation with mgmt. today, we find cost assumptions inherent in the guidance more than prudent, allowing margins and profits to now climb from here. And while mgmt’s expectation for a 17-21% gross margin this year (vs. ~25-26% pre-pandemic normalized, ~22% consensus preprint) was worse than feared and clearly not a positive for near-term earnings power or the day’s stock performance, we we’re hoping that the cloud sitting over Lamb into today’s results would be somewhat lifted, as incremental perspective around the cost pressures on the business, potential offsets, and higher pricing would shed light on the company’s ability to not only recover volumes (up ~11% in Q1), but also margins, all while finding a new EBITDA base off which Lamb can grow."