On Monday, Citi demonstrated confidence in Lamb Weston Holdings Inc . (NYSE: NYSE:LW), as the firm decided to raise its price target on the company's stock. The new price target is set at $75.00, up from the previous figure of $72.00, while the Buy rating remains unchanged.
The food processing company Lamb Weston is expected to release its fiscal first-quarter 2025 results after the market closes on October 1st. This will be followed by an earnings call on the morning of October 2nd. According to Citi, the upcoming financial report is not anticipated to significantly affect the company's stock. There is a slight concern regarding potential risks to sales and earnings figures.
Citi's analysis suggests that the timing of Lamb Weston's earnings release, which is set for the evening before the conference call, could indicate additional announcements accompanying the financial results. Historically, Lamb Weston has discussed the potential closure of older plants as part of its plant expansion strategy, especially if capacity utilization becomes an issue after the inauguration of more modern facilities. Currently, this seems to be a relevant scenario for the company.
Overall, Citi sees a long-term potential for Lamb Weston's stock to appreciate, which is reflected in the maintained Buy rating. Despite this optimism, Citi indicates that there is no immediate rush to acquire shares ahead of the company's earnings announcement.
In other recent news, Lamb Weston Holdings Inc. has been the subject of several significant developments. The company recently welcomed Sylvia Wilks as its new Chief Supply Chain Officer, an appointment that brings a wealth of supply chain management experience to the firm.
In financial news, Wells Fargo has revised its price target for Lamb Weston to $70.00, while maintaining an Overweight rating. This change reflects decreased sales forecasts for fiscal years 2025 and 2026, as well as adjusted EBITDA and EPS estimates. TD Cowen, on the other hand, has downgraded Lamb Weston's stock from Buy to Hold and reduced the price target to $61, citing concerns over market share and pricing.
Stifel also downgraded Lamb Weston's stock from Buy to Hold due to a weaker-than-expected profit forecast and potential for increased industry competition. The firm reduced its price target from $115 to $60. Citi reaffirmed its Buy rating on Lamb Weston's shares but reduced the price target from $104.00 to $72.00 following disappointing fourth-quarter fiscal year 2024 sales and earnings.
Despite these adjustments, analysts' earnings per share (EPS) forecasts remain robust, with projections of 5.48 for FY1 and 6.54 for FY2.
InvestingPro Insights
As Lamb Weston Holdings Inc. (NYSE: LW) gears up for its fiscal first-quarter 2025 earnings release, investors are watching the company's financial health and stock performance closely. Here are some key insights from InvestingPro that could provide a deeper context for Citi's recent price target upgrade and the company's long-term potential:
InvestingPro data shows Lamb Weston with a market capitalization of $9.4 billion and a healthy P/E ratio of 13.05, which dips slightly to 12.51 when looking at the last twelve months as of Q4 2024. This suggests that the stock may be trading at a reasonable earnings multiple compared to the industry. The company's revenue growth has been robust at 20.88% over the last twelve months, although there was a slight quarterly dip of -4.9% in Q4 2024. Additionally, Lamb Weston's gross profit margin stands at 27.64%, indicating a solid profit generation from its sales.
From an investment strategy standpoint, one InvestingPro Tip highlights that Lamb Weston has raised its dividend for 7 consecutive years, with the last dividend growth recorded at 28.57%. This could be a sign of the company's commitment to returning value to shareholders and its confidence in sustained profitability. Another tip to consider is that while the stock has seen a significant price fall over the last three months (-22.4%) and six months (-35.9%), analysts predict the company will be profitable this year. This juxtaposition could suggest a potential buying opportunity for long-term investors looking beyond short-term volatility.
For those interested in further analysis and additional InvestingPro Tips, there are more insights available on Lamb Weston's performance and projections at InvestingPro. Lamb Weston currently has a total of 9 additional InvestingPro Tips listed, which may help investors make more informed decisions.
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