William Blair analyst Jon Andersen has maintained their bullish stance on SMG stock, giving a Buy rating on December 3.
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Jon Andersen has given his Buy rating due to a combination of factors including the confidence expressed by Scotts Miracle-Gro’s management in their fiscal 2026 guidance. The company anticipates U.S. Consumer sales growth in the low single digits, an expansion in gross margin, and an EPS increase of 11% to 16%, alongside a significant free cash flow of $275 million and a leverage ratio in the 3s. These projections are seen as achievable and present a solid base case scenario with potential for further upside, particularly in gross margin improvements.
Additionally, Andersen sees substantial value in the company’s long-term growth prospects. If Scotts Miracle-Gro can maintain a sales growth rate of 2% to 3% and achieve an EBITDA margin of 20% over the next three years, the fiscal 2028 EBITDA could reach approximately $700 million. With an enterprise-value-to-EBITDA multiple of 11 to 12, which is considered a discount compared to similar companies, and assuming consistent annual free cash flow, the projected share price in two years could be around $90. This implies a potential cumulative shareholder return of about 70% over the next two years, reinforcing the Buy recommendation.
According to TipRanks, Andersen is an analyst with an average return of -0.5% and a 50.00% success rate. Andersen covers the Consumer Defensive sector, focusing on stocks such as Hain Celestial, Vital Farms, and Vita Coco Company.
In another report released on December 3, J.P. Morgan also maintained a Buy rating on the stock with a CHF41.00 price target.