Analyst Salvator Tiano of Bank of America Securities reiterated a Sell rating on Archer Daniels Midland (ADM – Research Report), reducing the price target to $48.00.
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Salvator Tiano’s rating is based on a combination of factors that continue to challenge Archer Daniels Midland’s stock performance. One key issue is the underperformance of the Nutrition segment, which has not met expectations and appears to be significantly less profitable than in the years 2021-22. Additionally, even if the new 45Z guidance is confirmed, which would support the biofuels market, it is expected to reduce biodiesel profits by over $100 million annually compared to levels before 2024. Another concern is the discovery of accounting irregularities last year, which, despite not affecting consolidated earnings, has negatively impacted the company’s valuation due to a lack of a robust accountability response.
Furthermore, the forecast for 2025 shows a lowered earnings per share estimate, now at the lower end of guidance, due to reduced buybacks and increased leverage from lower free cash flow. ADM’s outlook hinges on a significant recovery in several segments, which may be difficult to achieve. This cautious outlook is reflected in the revised price objective of $48, down from $54, and a maintained Underperform rating as the firm sees better opportunities elsewhere in the agricultural sector.
Tiano covers the Basic Materials sector, focusing on stocks such as Eastman Chemical, Celanese, and Huntsman. According to TipRanks, Tiano has an average return of -4.7% and a 50.00% success rate on recommended stocks.
In another report released on February 5, Barclays also maintained a Sell rating on the stock with a $50.00 price target.