Evercore starts coverage on The J. M. Smucker Company with ‘outperform’ rating
Investing.com -- Evercore ISI has initiated coverage of The J. M. Smucker Company with an “Outperform” rating and a price target of $117, implying roughly 17% upside from current levels, citing strong earnings growth potential, improving coffee margins, and significant cost-saving opportunities.
The investment bank said Smucker’s valuation remains attractive compared with other center-store food peers, despite what it described as “superior balance sheet flexibility” and stronger long-term earnings prospects. Evercore projects approximately 9% earnings-per-share compound annual growth between fiscal 2026 and 2028.
Analysts identified several key drivers behind the bullish outlook, including lower green coffee costs, productivity initiatives, reduced interest expenses, and profit recovery in the Sweet Baked Snacks division. The report estimates more than $200 million in potential productivity and cost savings opportunities across the business.
Coffee remains central to Smucker’s growth story. Evercore highlighted strong performances from Folgers and Café Bustelo, while noting that Dunkin-branded at-home coffee products continue to lag competitors. Analysts expect lower coffee input costs to significantly improve margins in fiscal 2027 and beyond.
The report also pointed to continued momentum for Uncrustables, Smucker’s fast-growing frozen sandwich brand, which is approaching $1 billion in annual sales. Analysts believe the product can continue delivering mid-single-digit to high-single-digit sales growth despite increasing private-label competition.
However, Evercore warned that challenges remain in Smucker’s Hostess snack business. Since acquiring Hostess Brands in 2023, the company has struggled with operational issues, declining sales, and integration problems, leading to major impairment charges. Analysts expect sales pressure to continue but believe aggressive cost-cutting and manufacturing optimization could help restore profitability.
The report also noted that activist investor involvement and recent board appointments could improve capital allocation discipline and operational execution.
Evercore’s base-case scenario assumes Smucker’s stock reaches $117 based on fiscal 2028 earnings estimates, while its bull-case target reaches $143 if coffee margins fully recover and growth accelerates. The bear-case scenario values the stock at $80 amid weaker sales and profit declines across several divisions.