Scotts Miracle-Gro: Solid Franchise but Rising Input Costs and Leverage Limit Upside, Justifying a Hold Rating

J.P. Morgan analyst Jeffrey Zekauskas downgraded the rating on Scotts Miracle-Gro Company to a Hold today, setting a price target of $67.00.

Jeffrey Zekauskas has given his Hold rating due to a combination of factors including rising input costs and resulting earnings uncertainty. He expects key raw materials such as urea, diesel, and polyethylene to be meaningfully more expensive in fiscal 2027 than in 2026, which has already led him to trim his EPS and EBITDA forecasts and reduce his December 2026 price target from $70 to $67 per share.

At the same time, he still views Scotts Miracle-Gro as a strong consumer franchise with leading market share and anticipates solid near-term performance, including constructive March-quarter results in the Consumer segment. However, elevated financial leverage, exposure to volatile hydroponics, and the prospect of slower earnings growth suggest limited upside from the current valuation, leading him to move the stock to a Neutral (Hold) stance rather than recommend more aggressive positioning.