Hormel Foods: Mixed Q2 Results and Uncertain Outlook Justify Hold Rating

Hormel Foods (HRL – Research Report), the Consumer Defensive sector company, was revisited by a Wall Street analyst yesterday. Analyst Peter Galbo from Bank of America Securities maintained a Hold rating on the stock and has a $35.00 price target.

Peter Galbo has given his Hold rating due to a combination of factors influencing Hormel Foods’ current financial outlook. Despite a slightly better performance in the second quarter, where margins exceeded expectations, the company’s sales fell short. This mixed result led to a reduction in the midpoint of the earnings per share (EPS) guidance, which, along with the significant increase in operating profit needed in the second half to meet the revised outlook, contributed to a cautious stance.
Another factor influencing the Hold rating is the lack of detailed disclosure regarding year-to-date cost savings, which is crucial for bridging the anticipated second-half performance. While there is some optimism about a strong gross margin exit rate in the fourth quarter due to improved turkey markets, the overall financial outlook for fiscal year 2025 remains narrowed. The updated guidance reflects a slight reduction in adjusted operating income, and the company does not expect to recover the interest investment income drag experienced in the first half. These elements collectively justify maintaining a Neutral rating with a price objective of $35.

In another report released on May 27, Exane BNP Paribas also upgraded the stock to a Hold with a $30.00 price target.

HRL’s price has also changed slightly for the past six months – from $32.430 to $30.380, which is a -6.32% drop .