Lamb Weston Holdings (NYSE:LW) is an S&P 500 (SPX) stock that has earned bullish reviews from analysts despite reporting weaker-than-expected Q3 FY24 results and lowering its outlook. The company cited a delay in the transition to a new enterprise resource planning (ERP) system in North America as the prime reason for its poor results. It also blamed an overall decrease in restaurant traffic and demand.
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Idaho-based Lamb Weston is an American food processing company that sells frozen french fries, waffle fries, and other frozen potato products. In the past year, LW stock has lost 26.1% of its value.
Analysts Highly Bullish on LW Stock’s Trajectory
Despite missing the consensus estimates on both the top and bottom line, analysts remain optimistic about LW stock’s long-term trajectory. Following the Q3 print, seven analysts reiterated their Buy ratings on LW stock but some of them cut their price targets.
For instance, Jefferies analyst Robert Dickerson kept his Buy view but slashed the price target on LW to $101 (26.5% upside) from $133. Dickerson believes that although near-term headwinds could weigh on earnings, LW stock is currently undervalued and has the potential for solid growth in the long run.
Dickerson lowered the price target to reflect the reduction in his model estimates for FY24 and FY25 based on the expected decline in volumes and margin/mix headwinds.
Similarly, TD Cowen analyst Robert Moskow maintained a Buy rating on LW, citing the long-term attractiveness of the frozen potato industry. Even so, he cut the price target to $105 from $132, which still implies a 31.5% upside potential on the stock.
As per Moskow, Lamb Weston operates in the attractive consumer staples industry and can seize back its leadership position with capacity expansion, improved product mix, and innovation in the years ahead.
Furthermore, Citi analyst Thomas Palmer kept his Buy view on LW stock and lowered the price target to $106 (32.7% upside) from $132. The analyst is encouraged by Lamb Weston’s ability to earn mid-to-high single digit EBITDA (earnings before interest tax depreciation and amortization) in Fiscal 2025, which implies a meaningful rebound.
What is the Price Forecast for Lamb Weston Stock?
On TipRanks, the average Lamb Weston price forecast of $109.38 implies nearly 37% upside potential from current levels. Also, LW stock commands a Strong Buy consensus rating, backed by eight unanimous Buys.
Key Takeaways
As per analysts, Lamb Weston stock is poised for long-term growth. The stock is trading at a forward P/E multiple of 14.38x, which is lower than the sector average of 17.42x and its 5-year historical average of 26.84x. Even after lowering the forecasts and price target for LW stock, analysts expect a solid upside based on the company’s wide moat and its presence in the consumer defensive category.
