UBS Reiterates Neutral Rating on Scotts Miracle-Gro (SMG) as Shares Remain Expensive

UBS analyst Peter Grom reiterated a Neutral rating and $70.00 price target on Scotts Miracle-Gro (NYSE: SMG).

The analyst commented, "SMG is scheduled to report F3Q EPS next Wednesday (7/29) before the open. Since the company last reported, SMG has moved +13.4% higher on an absolute basis, with our conversations with investors signaling that sentiment continues to become more constructive on both the setup for this quarter and the year. In fact, SMG is one of the best performing stock MTD in our coverage (+3.3%), which is primarily due to the fact that (1) the setup this quarter looks increasingly attractive due to favorable weather/solid POS trends, (2) management succession was recently formalized, clearing an overhang for the stock, and (3) estimates for FY26 look more than achievable at this stage due to strong top line trends/efforts to drive continued margin expansion. The one point of debate in our view centers around FY27, where the company will have to deal with potential commodity inflation stemming from urea/other inputs (albeit costs have eased relative to the Spring, they still remain elevated vs. FY26 levels and have moved up in recent weeks) as well as any shifts in the company's LT targets at the upcoming Investor Day in NYC. While NT visibility remains strong, with shares trading as expensive relative to historical averages, we would wait for greater clarity on the earnings trajectory looking out over the next 12-18 months and/or a pullback in shares before becoming constructive."

For an analyst ratings summary and ratings history on Scotts Miracle-Gro click here. For more ratings news on Scotts Miracle-Gro click here.

Shares of Scotts Miracle-Gro closed at $69.30 yesterday.

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