Nomad Foods Rises On Updated 4Q Guidance; Street Is Bullish

Nomad Foods shares rose 2% in pre-market trading today after the UK-based Frozen Foods company provided a favorable update on its 4Q performance.

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The company stated that its 4Q performance is tracking ahead of its prior expectations with organic revenue growth now projected to increase in the high single-digit percent range. Nomad (NOMD), which owns brands like Birds Eye, Findus, Iglo and Aunt Bessie’s, had earlier predicted mid-single-digit organic revenue growth for the fourth quarter. Organic revenue increased 10% through the first two months of the fourth quarter and is expected to remain above “historical levels” in December.

Nomad now expects to achieve 2020 adjusted EBITDA of about 465 million Euros and adjusted EPS of approximately 1.34 Euros. (See NOMD stock analysis on TipRanks)

CEO Stéfan Descheemaeker stated, “Our latest expectations have us on pace to achieve a 16th consecutive quarter of organic revenue growth and compounded annual Adjusted EPS growth of 12% since 2016. These preliminary results reinforce the focus and commitment of our entire organization to perform at a high level amidst a global pandemic.”

Meanwhile, Nomad, which also trades on NYSE, has repurchased over $95 million of shares so far in 4Q, bringing the total year-to-date repurchase to over $195 million under the $300 million share repurchase plan authorized in March 2020.

Back in October, BTIG analyst Peter Saleh initiated coverage of Nomad Foods with a Buy rating and a price target of $30. Saleh believes that the company’s “foundational investments” over the past several years are resulting in market share gains across its brands in core European markets and will result in Nomad’s brands and growth prospects becoming “considerably better positioned” than the “under-resourced” assets that it acquired several years ago.

Saleh is also optimistic that the recent incremental marketing and investments in plant-based offerings with Nomad’s Green Cuisine brand will begin to gain traction.

The rest of the Street is in line with Saleh and the stock boasts a Strong Buy analyst consensus based on 5 unanimous Buys. The average price target stands at $29.20, indicating an upside potential of 20.1% over the coming year. Shares have risen 8.7% year-to-date.