On Wednesday, Mizuho (NYSE:MFG) Securities adjusted its outlook on BellRing Brands (NYSE:NYSE:BRBR) shares, increasing the price target to $80.00 from the previous $72.00, while reaffirming an Outperform rating on the stock.
The firm's analysis suggests that BellRing is poised for enhanced momentum heading into fiscal year 2025, driven by its first significant marketing investments in four years and a series of innovative products that are expected to broaden consumer usage occasions.
The upgraded price target reflects a positive view of BellRing's supply capacity for new shakes, which is anticipated to grow by mid to high teens percentage. This increase, along with already favorable safety stocks, is likely to tilt near-term revenue projections upward.
Moreover, the forecast for cost inflation in FY25 is more optimistic than some had anticipated, with estimates now sitting at mid-single-digit percentages, which is less than the +4% previously modeled by Mizuho.
Mizuho has also adjusted its EBITDA expectations for BellRing, now estimating $486 million for FY25, an increase from the prior forecast of $481 million. For FY26, the firm projects EBITDA to reach $546 million, marking a 12% year-over-year growth. The new price target is based on a 23x multiple of the firm's estimated CY25 EBITDA.
While the analyst acknowledges that significant valuation multiple expansion and rising expectations are already factored into the stock price, limiting the near-term upside potential, they maintain a positive long-term outlook for BellRing Brands. The firm suggests that any pullbacks in the stock price should be considered opportunities for investors to buy.
In other recent news, BellRing Brands has been the focus of several financial firms following a series of upgrades and impressive earnings reports. Evercore ISI has maintained an Outperform rating on BellRing, highlighting a 15%+ organic sales growth and raising the price target to $78. This outlook is based on robust sales and EBITDA growth, along with a 20 times FY25 estimated EV/EBITDA multiple.
Barclays (LON:BARC) also maintained an Overweight rating on BellRing, raising the price target to $79, in light of the company's preparation for increased supply of Premier Protein products. Other firms such as BofA Securities, Stifel, and Truist Securities have also issued upgrades, with new price targets set at $82, $81, and $75 respectively. These upgrades follow BellRing's reported revenue of $555.8 million and an Adjusted EBITDA of $116.5 million.
These are recent developments that have been influenced by BellRing's strong performance in the fourth quarter of fiscal year 2024 and its promising outlook for fiscal year 2025. The company's growth has been attributed to increased distribution, enhanced product assortment, and rising consumer demand for protein-centric meal solutions.
Despite challenges such as higher inflation and increased advertising costs, BellRing's strategic positioning and strong financial performance have been recognized by multiple financial firms.
InvestingPro Insights
BellRing Brands (NYSE:BRBR) continues to demonstrate strong financial performance, aligning with Mizuho Securities' optimistic outlook. According to InvestingPro data, the company's revenue growth stands at an impressive 19.76% for the last twelve months as of Q4 2024, with quarterly revenue growth at 17.6%. This robust growth trajectory supports Mizuho's expectations for enhanced momentum going into fiscal year 2025.
InvestingPro Tips highlight that BellRing is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.75. This suggests that the stock may be undervalued considering its growth prospects, which could provide additional upside potential for investors. Furthermore, the company's strong return over the last three months, with a price total return of 32.67%, reflects the market's positive reception of BellRing's recent performance and future outlook.
It's worth noting that InvestingPro offers 17 additional tips for BellRing Brands, providing investors with a comprehensive analysis of the company's financial health and market position. These insights can be particularly valuable for those looking to make informed investment decisions in light of Mizuho's upgraded price target and the company's growth prospects.
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