On Wednesday, BofA Securities updated its outlook on BellRing Brands (NYSE:BRBR), increasing the price target to $82 from $75 and maintaining a Buy rating. The adjustment follows BellRing Brands' report of a stronger than expected fourth quarter for the fiscal year 2024, with adjusted EBITDA reaching $116.5 million.
This performance surpassed both BofA Securities' projection of $114 million and the consensus estimate of $113 million, attributed to gains in both revenue and margins.
BellRing Brands, known for its Premier Protein products, has shown growth in household penetration, market share, distribution, and purchase rates. This progress has been achieved without significant advertising or promotional activities at retail outlets. The company's initial financial outlook for fiscal year 2025 is promising, with projected net sales of $2.24 to $2.32 billion, which is higher than the range communicated in the third quarter of 2024, and an adjusted EBITDA forecast of $460 to $490 million.
The strong results of the fourth quarter and the solid position at the end of the fiscal year suggest that BellRing Brands is well-prepared for the upcoming year. The company plans to initiate a national advertising campaign towards the end of the first quarter of 2025, marking its first television presence since 2021. Additionally, BellRing Brands is preparing to increase production volumes of shakes in the first quarter, with expectations for full-year production volumes in the mid to high teens range.
In light of these developments, BofA Securities has revised its adjusted EBITDA estimates for fiscal years 2025 and 2026 to $475 million and $518 million, up from previous estimates of $455 million and $498 million, respectively. Furthermore, the firm has introduced a new adjusted EBITDA estimate of $565 million for fiscal year 2027. The company's focus on transitioning from supply-driven to demand-driven operations, supported by favorable macroeconomic tailwinds, is expected to contribute to its continued financial growth.
In other recent news, BellRing Brands has been receiving significant attention from multiple financial firms following robust Q4 results. Stifel raised the company's target to $81, citing strong Q4 performance with an 18% organic increase in revenue and an EBITDA of $116.5 million.
Truist Securities also increased its target to $75, reflecting updated financial estimates for fiscal years 2025 and 2026. Deutsche Bank (ETR:DBKGn) increased its price target to $77, maintaining a Buy rating due to BellRing's strong fiscal year 2025 outlook. Citi raised its target to $83, highlighting strong demand for the company's shake products. Stephens reaffirmed its Equal Weight rating, with a steady price target of $61.
These adjustments come after BellRing Brands reported a revenue of $555.8 million, surpassing expectations, and an Adjusted EBITDA of $116.5 million. The company also purchased 1.3 million shares for $74 million and retains a $216 million share repurchase authorization.
Looking ahead, BellRing Brands has issued guidance for fiscal year 2025 that anticipates revenue growth between 12% and 16%, with EBITDA expected to rise by 5-11%. These are recent developments that investors should take into account when considering BellRing Brands. However, the company has also expressed caution about the potential impact of inflation and increased marketing expenses.
InvestingPro Insights
BellRing Brands' strong performance and positive outlook are further supported by recent InvestingPro data and tips. The company's market capitalization stands at $9.47 billion, reflecting investor confidence in its growth trajectory. BellRing's revenue for the last twelve months as of Q4 2024 reached $1.996 billion, with an impressive revenue growth of 19.76% over the same period. This aligns with the company's robust financial outlook for fiscal year 2025 mentioned in the article.
InvestingPro Tips highlight that BellRing Brands is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.75. This suggests that the stock may be undervalued considering its growth prospects. Additionally, the company's strong return over the last three months, with a price total return of 32.67%, underscores the market's positive reaction to its recent performance and future plans.
It's worth noting that InvestingPro offers 17 additional tips for BellRing Brands, providing investors with a comprehensive analysis of the company's financial health and market position. These insights can be particularly valuable as BellRing prepares to launch its national advertising campaign and increase production volumes in the coming year.
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