Multiple food processing companies, including Lamb Weston Holdings (LW), have been named in a price-fixing lawsuit. According to several class-action lawsuits, Lamb Weston collaborated with other companies in the industry, such as Cavendish Farms, McCain Foods, and the J.R. Simplot Company. The lawsuit claims they coordinated and exchanged information that led to price increases for potato products in 2021. The Washington Post reports that five lawsuits have been filed so far.
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The types of frozen foods that became more expensive as a result include French fries, hash browns, and tater tots. The lawsuit alleges that over the past two years, frozen potato product prices have risen by 47%.
What’s Happening with Lamb Weston Stock?
So far, this news hasn’t impacted Lamb Weston stock. Shares closed last week in the green and have continued to rise in pre-market trading today. LW has been gradually trending upward over the past week with little volatility. Overall, it has performed very well in the past quarter, with a 24% gain for the three-month period. However, news of the lawsuit could potentially compromise this progress.
Redner’s Markets, a Pennsylvania-based supermarket chain, filed a complaint against these companies on Friday, November 22. The plaintiffs officially filed a lawsuit yesterday, claiming that Lamb Weston and its aforementioned peers used data aggregation services to trade sensitive information that allowed them to artificially fix potato prices. The suit refers to the companies involved as a “potato cartel,” describing their coordinated effort as a violation of antitrust law.
So far, Lamb Weston has claimed that these accusations have no merit. However, if the lawsuit drags on, it could create doubt about the company’s actual growth prospects, potentially pushing share prices down. The fact that multiple federal suits have been filed suggests that many parties believe they have been victimized by the actions of the “potato cartel,” and more lawsuits could emerge in the near future.
Is Lamb Weston Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on LW stock based on five Buys and four Holds assigned in the past three months, as indicated by the graphic below. Although shares have fallen 21% over the past year, the average LW price target of $80.13 per share still implies 3% upside potential.
