On Friday, Piper Sandler showed confidence in Utz Brands (NYSE:UTZ) shares, increasing its price target on the stock to $24 from $22 while maintaining an Overweight rating. The adjustment follows Utz Brands' third-quarter financial results for 2024, which met expectations regarding revenues and adjusted EBITDA.
The company's promotional discounting, which saw an uptick in the third quarter of 2024, has now stabilized. Utz Brands continues to exercise restraint in its pricing strategies, avoiding the pursuit of temporary volume increases through aggressive discounting. The snack manufacturer's prospects for 2025 appear positive, with expected organic growth driven by volume increases and enhanced capacity for its kettle products.
Analysts at Piper Sandler have adjusted their projections based on the company's performance and outlook. The 2024 estimated organic sales growth has been slightly increased from 2.1% to 2.2%. However, the estimated earnings per share (EPS) for 2025 have been revised downward from $0.86 to $0.83, while the 2026 EPS estimate remains unchanged at $0.96.
The new price target of $24 is based on a 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA) valuation, which implies approximately 17 times the enterprise value to EBITDA ratio. The analyst's commentary suggests that Utz Brands is on track to meet or exceed its three-year goals, bolstered by revenue growth and potential improvements in margins.
In other recent news, Utz Brands Inc. has reported steady growth in its third quarter of 2024 earnings call, despite a competitive market. The company anticipates an acceleration in organic growth to approximately 3.5% for the fourth quarter, driven by increased marketing, innovation, and distribution, especially in new geographies.
Utz has seen an increase in household penetration and consumer engagement, with brands like On the Border and Boulder Canyon leading the way. However, the company noted challenges in the private label segment and complementary products.
The full-year organic growth outlook was reaffirmed at 2% to 2.5%, with kettle production capacity expansion planned to start in Q1 2025. Utz expressed confidence in the supply chain capacity to support future growth and highlighted the flexibility of their hybrid distribution model in servicing customers.
Despite flat consumption data and competitive pressures, particularly in the potato chip segment, Utz has reported positive distribution gains with larger national retailers and alternative channels.
The company foresees continued success, underpinned by strategic initiatives aimed at driving growth and expanding market presence, despite some product segments facing headwinds.
InvestingPro Insights
To complement Piper Sandler's analysis, InvestingPro data offers additional insights into Utz Brands' financial position. The company's market capitalization stands at $2.43 billion, reflecting its significant presence in the snack industry. Despite the positive outlook from analysts, it's worth noting that Utz is currently trading at a high earnings multiple, with a P/E ratio of -94.15, indicating that investors are pricing in future growth expectations.
On a positive note, InvestingPro Tips highlight that Utz has raised its dividend for 4 consecutive years, demonstrating a commitment to shareholder returns. This is further supported by the company's current dividend yield of 1.37%. Moreover, Utz's liquid assets exceed short-term obligations, suggesting a solid financial position to support its growth initiatives.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Utz Brands, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.