UPDATE: Citigroup Reiterates on The J.M. Smucker Company as Stock Reflects Recent Negative News
In a report published Tuesday, Citigroup analyst David Driscoll reiterated a Buy rating on The J.M. Smucker Company (NYSE: SJM), but lowered the price target from $119.00 to $118.00.
In the report, Citigroup noted, “Smucker disappointed in F3Q14 and in its outlook missing 3Q by -2c and reducing F2014 by -22c to $5.55-$5.60. Driving the disappointing F14 outlook was weaker than expected sales of Jiff peanut butter and intense price competition in grape jelly. In F4Q, management expects coffee volumes to weaken and price competition to remain high in peanut butter, jelly, and certain baking products.
"To address these issues, management is bringing new coffee products to market (new K-cups), will reach sig. new K-cup distribution, and will see cost declines in peanuts and other commodities that will increase Smucker's flexibility to be more competitive. Management also signaled that the balance sheet, at 1.6x Debt to EBITDA, is primed for M&A activity or significant share repurchase. With the stock trading at ~13.8x cash '15 EPS, we see good value here and expect sales trends to pick up in the coming quarters – Buy.”
The J.M. Smucker Company closed on Friday at $91.81.
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