Marc Torrente, an analyst from Wells Fargo, maintained the Buy rating on Lamb Weston Holdings (LW – Research Report). The associated price target is $128.00.
Marc Torrente has given his Buy rating due to a combination of factors related to Lamb Weston Holdings’ future growth prospects and financial health. Despite current market volatility and near-term visibility concerns, Torrente anticipates volume growth turning positive in the fourth fiscal quarter, with momentum carrying into the following year. He also expects that, although price adjustments may be modest, the fiscal year 2025’s sales could increase significantly with potential for margin improvement. This outlook is further supported by an increase in free cash flow which, in Torrente’s view, could justify a higher valuation multiple for the company’s stock.
Torrente’s positive assessment also takes into account the forthcoming end of transitory sales headwinds by the end of fiscal year 2024, paving the way for normalized growth. He models sales to grow by 5.8% in fiscal year 25, which is at the high-end of the company’s growth algorithm and above other Street estimates. The report reflects confidence in margin progression as well, with an anticipated gross margin increase, factoring in non-recurring costs and benefits from pricing, volume leverage, product mix, and ongoing productivity initiatives. With input costs expected to stabilize or even deflate, particularly for key commodities like potatoes and oils, Torrente sees a potential for cost savings that could further enhance profitability.
According to TipRanks, Torrente is a 2-star analyst with an average return of 3.3% and a 54.55% success rate. Torrente covers the Consumer Defensive sector, focusing on stocks such as Post Holdings, Lamb Weston Holdings, and MGP Ingredients.
In another report released on March 21, Goldman Sachs also maintained a Buy rating on the stock with a $139.00 price target.
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Lamb Weston Holdings (LW) Company Description:
Lamb Weston Holdings, Inc. engages in the production, distribution, and marketing of value-added frozen potato products. It operates through the following business segments: Global, Foodservice, Retail, and Other. The Global segment includes branded and private label frozen potato products sold in North America and international markets. The Foodservice segment comprises branded and private label frozen potato products sold throughout the United States and Canada. The Retail segment consists consumer facing retail branded and private label frozen potato products sold primarily to grocery, mass merchants, club, and specialty retailers. The Other segment compose of vegetable and dairy businesses. The company was founded on July 5, 2016 and is headquartered in Eagle, ID.
