JM Smucker: Buy Rating Affirmed Amidst Conservative Guidance and Attractive Valuation

Citi analyst Thomas Palmer maintained a Buy rating on JM Smucker (SJM – Research Report) yesterday and set a price target of $118.00.

Thomas Palmer has given his Buy rating due to a combination of factors that suggest potential long-term growth for JM Smucker despite recent setbacks. The stock experienced a significant decline, marking its largest single-day drop in decades, which was driven by a lower-than-expected earnings outlook. However, Palmer views the company’s guidance as conservative, a characteristic historically associated with JM Smucker, and believes the stock’s current valuation is attractive compared to its peers.
Palmer also highlights that JM Smucker’s portfolio is better positioned for topline growth than many of its competitors, especially considering that Hostess now comprises a smaller portion of sales. Although the company faces challenges such as spending plans and coffee elasticity, Palmer notes that JM Smucker has a path for EPS growth that could exceed its long-term algorithm. The expected share price return of 25% further supports his Buy rating, indicating confidence in the company’s ability to overcome short-term hurdles and achieve future growth.

Palmer covers the Consumer Defensive sector, focusing on stocks such as Campbell Soup, Conagra Brands, and General Mills. According to TipRanks, Palmer has an average return of 0.6% and a 47.57% success rate on recommended stocks.

In another report released today, Morgan Stanley also maintained a Buy rating on the stock with a $115.00 price target.