JPMorgan made an adjustment to its price target for The Duckhorn Portfolio, Inc. (NYSE: NAPA), reducing it to $7.00 from the previous $9.00. Despite this change, the firm maintained a Neutral rating on the stock. The revision comes ahead of the company's expected fourth-quarter earnings report, which is scheduled for release on the upcoming Monday after the market closes.
The Duckhorn Portfolio's fourth-quarter financial performance is anticipated to align closely with the current consensus, with JPMorgan's unchanged estimates for the quarter at $104.3 million in sales and $35.1 million in EBITDA. These figures are consistent with Bloomberg consensus estimates of $105.0 million in sales and $34.7 million in EBITDA. The company's own guidance for the quarter projects sales between $100 million and $110 million and EBITDA ranging from $30.8 million to $34.8 million.
For the fiscal year 2025, JPMorgan has slightly lowered its estimates for The Duckhorn Portfolio. This adjustment reflects potential challenges related to pricing and promotional activities, as well as a deceleration in the growth of contributions from Sonoma-Cutrer, which are now expected to increase at a mid-single-digit percentage rate, down from a high-single-digit rate previously forecasted.
The revised fiscal year 2025 projections by JPMorgan indicate sales growth of 22.0% and operating sales growth (OSG) of 2.4%, totaling $488.5 million. Earnings per share (EPS) and EBITDA are projected to grow by 13% and 25% year-over-year, reaching $0.58 and $187.9 million, respectively.
This is a slight decrease from the prior expectations of a 15% increase in EPS to $0.60 and a 27% rise in EBITDA to $190.4 million. Current Bloomberg consensus for the fiscal year 2025 stands at an increase of 21% in sales, 14% in EPS, and 24% in EBITDA, amounting to $487 million in sales, $0.63 in EPS, and $185 million in EBITDA.
The Duckhorn Portfolio faced an outlook adjustment by Barclays, which lowered its price target from $8.00 to $6.00, while maintaining an Equalweight rating on the company's shares. This revision followed The Duckhorn Portfolio's broad forecast for the fourth fiscal quarter, which indicated potential outcomes ranging from a decrease of 7.4% to an increase of 2.5%, excluding the impact of the Kosta Browne acquisition shift. The company's performance was deemed hard to predict due to distributor de-stocking, a factor with limited visibility.
Barclays emphasized the importance of the industry's position moving into fiscal year 2025, including inventory alignment, recent consumer trends in the luxury wine market, and the momentum of NAPA's portfolio.
The firm slightly tempered the FY25 organic sales forecast for The Duckhorn Portfolio by 50 basis points, reflecting a cautious view of the industry's outlook, despite the company's expected continued market share gains.
InvestingPro Insights
Recent InvestingPro data provides additional context to JPMorgan's analysis of The Duckhorn Portfolio, Inc. (NYSE: NAPA). The company's market capitalization stands at $802.91 million, with a P/E ratio of 12.76 over the last twelve months as of Q3 2024. This relatively low P/E ratio aligns with JPMorgan's cautious stance, as reflected in their Neutral rating and reduced price target.
InvestingPro Tips highlight that NAPA is trading near its 52-week low, with the stock price falling significantly over the last three months. This trend is consistent with JPMorgan's concerns about potential challenges in pricing and promotional activities. However, it's worth noting that NAPA boasts impressive gross profit margins, which stood at 54.91% over the last twelve months. This strength in profitability could provide some resilience as the company navigates the challenges outlined in JPMorgan's report.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for NAPA, providing a broader perspective on the company's financial health and market position.
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