Morgan Stanley downgraded J.M. Smucker to Sell from Hold and maintained a price target of $107 (3.9% downside potential), ahead of the food producer’s 1Q results on Aug. 25.
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Morgan Stanley analyst Pamela Kaufman calls Smucker (SJM) a “relative underperformer” in the sector. Kaufman sees the company “as a lesser beneficiary of elevated Packaged Food demand given large exposure to Pet (~37% of sales), inconsistent investment in marketing/innovation & share losses in key categories.”
Last month, the company raised its quarterly dividend by 2.3%. It will now pay a quarterly dividend of $0.90 per share, which will be paid on Sep. 1, to shareholders of record as of Aug. 14.
In 4Q, Smucker reported quarterly earnings of $2.57 per share, beating the Street consensus of $2.29 per share. Its net sales of $2.09 billion came ahead of analysts’ expectations of $2.06 billion, driven by increased consumer demand resulting from the COVID-19 pandemic.
Currently, the Street has a cautiously bearish outlook on the stock. The Moderate Sell analyst consensus is based on 3 Sells and 5 Holds. The average price target of $109.63 implies downside potential of about 1.6%. (See SJM stock analysis on TipRanks).
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