On Thursday, Flowers Foods (NYSE:FLO) received a neutral rating from DA Davidson, with a set price target of $24. The initiation of coverage on the stock comes with a cautious outlook, citing the company's historical performance in inflationary periods and recent price corrections.
The bakery products manufacturer, known for brands like Nature's Own and Wonder Bread, had seen its stock trade roughly 20% higher than its peers in 2022. This was attributed to a dramatic rise in wheat prices. However, as these prices have since adjusted, albeit remaining above pre-2020 levels, Flowers Foods' relative valuation has returned to its average over the past five years.
The analyst noted current market conditions, including volume softness and potential for increased competition, which was described as "still muted compared to 2019, though increasing." This competitive landscape poses some risk to the company's financial outlook for the fiscal year 2024, potentially impacting both top and bottom lines.
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