Craig-Hallum downgrades Farmer Bros. to Hold from Buy

As previously reported, Craig-Hallum downgraded Farmer Bros. (FARM) to Hold from Buy with a $2.50 price target following a strong Q4 profitability beat driven largely by pricing, which management noted is now maxed out, leading to topline and margin pressure expected in FY26. The firm commends management’s heroic execution stabilizing the business over the past two years but sees the topline and margin pressure combining with the strategic review and recent run-up in shares from $1.40 to $2.30 to likely keep shares range-bound for the next couple quarters. Craig-Hallum will look for signs of large customer wins and/or improving coffee macro environment to get more constructive on the topline/margin outlook and remains a long-term believer in the management team and upside potential in Farmer’s shares.