On Wednesday, Citi raised its price target for BellRing Brands (NYSE:BRBR) shares to $72.00, up from the previous target of $67.00, while maintaining a Buy rating on the stock. The adjustment follows the end of BellRing Brands' fiscal fourth quarter in September.
The company, known for its Premier Protein products, is expected to report its fourth-quarter results in the second half of November. Citi anticipates that BellRing Brands will likely exceed earnings per share (EPS) expectations, attributing the potential beat to strong sales performance and a favorable cost environment.
Looking ahead to fiscal year 2025, BellRing Brands has projected sales growth at the higher end of its long-term algorithm of 10-12%. Citi's analyst suggests that the company's initial EBITDA margin forecast could align with the market consensus, which anticipates a 21% margin, albeit a 100 basis points decrease year-over-year.
The firm expresses confidence in maintaining a Buy rating for BellRing Brands, citing the company's solid sales growth guidance. However, the analyst does not foresee the upcoming earnings report to significantly drive the stock upwards.
In other recent news, BellRing Brands reported a strong third quarter for fiscal year 2024, driven mainly by significant growth in net sales and adjusted EBITDA. The company's leading brand, Premier Protein, played a crucial role in this success, with a 20% increase in net sales and record household penetration. As a result of these robust results, BellRing Brands has raised its full-year outlook, expecting sales and EBITDA to increase by 18-20% and 27-30%, respectively.
The company's financial health was further underlined by a cash flow of $69 million from operations and a strategic share repurchase program. Notably, BellRing Brands repurchased 1.3 million shares for $74 million and still retains a $216 million share repurchase authorization.
Looking ahead, BellRing Brands anticipates continued robust sales growth into fiscal year 2025, with additional production capacity secured for Q4 to support the raised guidance. However, the company has expressed caution about the potential impact of inflation and increased marketing expenses on its bottom line in fiscal year 2025. Lastly, expansion plans are being evaluated for 2026 to further bolster the company's growth potential.
InvestingPro Insights
Recent data from InvestingPro adds depth to Citi's bullish outlook on BellRing Brands (NYSE:BRBR). The company's market cap stands at $8.05 billion, reflecting its significant presence in the protein products market. BellRing's revenue growth of 21.58% over the last twelve months as of Q3 2024 aligns with Citi's positive view on the company's sales performance.
InvestingPro Tips highlight that 11 analysts have revised their earnings upwards for the upcoming period, supporting Citi's expectation of BellRing potentially exceeding EPS expectations. Additionally, the company is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.8, suggesting potential undervaluation despite trading near its 52-week high.
The strong financial performance is further evidenced by BellRing's impressive 49.13% price total return over the past year. With a fair value of $66 based on analyst targets, there may still be room for growth beyond Citi's new price target of $72.
Investors seeking more comprehensive analysis can access 13 additional InvestingPro Tips for BellRing Brands, offering deeper insights into the company's financial health and market position.
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