On Wednesday, TD (TSX:TD) Cowen analysts revised their outlook on J.M. Smucker (NYSE:NYSE:SJM) stock, downgrading it from Buy to Hold and adjusting the price target to $121 from the previous $130. The revision reflects concerns about the performance of the company's acquired Hostess business and the Pet segment's future challenges.
The downgrade was prompted by insights indicating that the Hostess business, which J.M. Smucker acquired, had previously benefited from temporary factors such as government subsidies and increased snacking during the pandemic.
These factors are no longer expected to drive the same level of performance. The analysts noted that J.M. Smucker would likely have to redirect savings and synergies to address a 6% decline in this area.
Despite the downgrade, the core business of J.M. Smucker is reported to be doing well. However, the Pet business segment, known for its past volatility, is currently considered to be on less stable footing. This is due in part to a loss of scale and the anticipation of more challenging comparisons in the future.
TD Cowen also adjusted its forecast for J.M. Smucker's fiscal year 2026 earnings per share (EPS) to $10.50, which falls slightly below the consensus estimate of $10.56. This new EPS estimate aligns with the analysts' expectations of the need for reinvestment to stabilize the company's performance.
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