Argus Downgrades J.M. Smucker (SJM) to Hold

Argus analyst Taylor Conrad downgraded J.M. Smucker (NYSE: SJM) from Buy to Hold.

The analyst comments "We are lowering our rating on J.M. Smucker Co. (NYSE: SJM) to HOLD from BUY. Amid an environment of economic uncertainty, Smucker has struggled to grow volume. The company is working to offset commodity inflation and supply-chain challenges with price hikes and improved productivity. However, the price hikes are further pressuring volume. Coffee is a concern, as green coffee prices continue to rise and pressure margins, tariffs add an additional weight on margin growth. On the positive side, we have a favorable view of the divestment of slower-growing pet food brands. The company is also focusing on the convenience food industry with its acquisition of Hostess Brands, which it is now leveraging in cross-promotional events with legacy Smucker brands. Additionally, following the acquisition, management is taking steps to establish revenue synergies by expanding Uncrustables into C-stores. We believe these initiatives, if executed well, will support revenue and earnings growth over the long-term. On the fundamentals, SJM shares are trading at 12-times our FY27 EPS estimate, below the peer average of 17. We believe valuations are reasonable given the inflationary environment, consumer caution, and green coffee pressures. We would consider returning the stock to BUY on signs of sustainable margin and volume growth."

For an analyst ratings summary and ratings history on J.M. Smucker click here. For more ratings news on J.M. Smucker click here.

Shares of J.M. Smucker closed at $110.86 yesterday.

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