Analyst Adam Samuelson of Goldman Sachs maintained a Sell rating on Hormel Foods (HRL – Research Report), with a price target of $26.00.
Adam Samuelson has given his Sell rating due to a combination of factors affecting Hormel Foods’s potential for earnings growth. The company’s most recent quarterly results aligned with the low expectations previously set by analysts, indicating a concerning trend with little to no growth in earnings per share (EPS) forecasted for the upcoming fiscal year. This performance dip is particularly tied to weaker than expected outcomes in the Retail and International sectors, which have been impacted by a significant drop in commodity turkey prices from their previously inflated levels.
The provided EPS guidance for FY2024 not only fell short of the consensus estimates but also suggested that profitability within the turkey segment could revert to the average levels seen between FY19-21, which is notably less than ideal. Samuelson’s analysis further took into account additional costs and margin pressures across Hormel Foods’s portfolio, leading to a reduction in future EPS projections to levels reminiscent of FY17. The current valuation of Hormel Foods’s stock comes at a premium when compared to peers, despite its lack of consistency in sales, earnings, and returns, which contributes to an unappealing risk/reward profile for investors. Consequently, the price target for the stock has been revised downwards, reinforcing the Sell recommendation.
According to TipRanks, Samuelson is a 4-star analyst with an average return of 4.9% and a 48.06% success rate. Samuelson covers the Consumer Defensive sector, focusing on stocks such as Darling Ingredients, Hormel Foods, and Lamb Weston Holdings.
In another report released today, Bank of America Securities also maintained a Sell rating on the stock with a $33.00 price target.
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Hormel Foods (HRL) Company Description:
Founded in 1891, Hormel Foods Corp. is a Minnesota-based food company, which produces and markets various meat and food products to retail, food service, deli, and commercial customers. It operates through the following four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other.
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