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Lamb Weston Holdings: Hold Rating Amid Board Changes and Pricing Pressures

Lamb Weston Holdings: Hold Rating Amid Board Changes and Pricing Pressures

In a report released today, Robert Moskow from TD Cowen maintained a Hold rating on Lamb Weston Holdings (LWResearch Report), with a price target of $58.00.

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Robert Moskow’s rating is based on several factors that influence Lamb Weston Holdings’ current market position. The recent addition of four independent directors to the board, while seen as a positive step, did not meet some shareholders’ expectations for more aggressive changes. This decision reflects a compromise with activist investors JANA Partners and Continental Grain, who initially advocated for significant board and leadership changes due to perceived strategic missteps and poor oversight.
Additionally, the company faces ongoing pricing pressures in the frozen potato industry, with a significant portion of U.S. contracts up for renegotiation in the near future. Despite efforts to lower pricing, Lamb Weston has experienced customer losses, indicating a challenging environment ahead. The company’s growth estimates for the upcoming fiscal year are modest, with expectations of a decline in organic growth and only moderate EBITDA growth. These factors contribute to the Hold rating, as they suggest limited short-term upside potential for shareholders.

In another report released today, Stifel Nicolaus also reiterated a Hold rating on the stock with a $56.00 price target.

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