On Tuesday, Stifel financial analysts adjusted their outlook on TreeHouse Foods (NYSE:THS) shares, reducing the price target to $36 from the previous $38, while continuing to recommend a Hold rating.
The adjustment comes after the company reported a start to 2024 with revenues exceeding expectations, but with earnings before interest, taxes, depreciation, and amortization (EBITDA) at the lower end of its forecasted range.
TreeHouse Foods has confirmed its financial projections for the year, which include a revenue increase of 0-2% and an EBITDA range of $360-390 million. The company expects a significant portion, approximately 70%, of its annual EBITDA to be generated in the latter half of the year.
This anticipated increase is attributed to the acquisition of new business, cost-saving initiatives, and the resolution of previous disruptions in broth production.
The firm's analysis suggests that the implied EBITDA for the second half of the year indicates a potential annual run rate of around $435 million as the company moves into 2025.
This projection hints at a mid-teen EBITDA growth for the next year, surpassing TreeHouse Foods' own growth algorithm of 8-10%. The company is likely to benefit from favorable year-over-year comparisons due to the prior broth disruption.
Despite the positive outlook for the latter half of 2024 and into the following year, Stifel has decided to maintain a cautious stance with a Hold rating, while adjusting the price target slightly downward.
InvestingPro Insights
As TreeHouse Foods (NYSE:THS) navigates through its financial year, recent data from InvestingPro provides a deeper insight into the company's current market position. With a market capitalization of $1.84 billion and a forward-looking P/E ratio of 29.8, the company is trading at a valuation that reflects expectations of near-term earnings growth. Despite the recent reduction in price target by Stifel, the company's share repurchase strategy and high shareholder yield, as noted in InvestingPro Tips, indicate a management team confident in the firm's value proposition.
Additionally, TreeHouse Foods is trading near its 52-week low, which may present an opportunity for investors considering the company's expected profitability this year and net income growth forecast. However, it's worth noting that the stock has experienced significant price declines over the last week and three months, with analysts revising earnings downwards for the upcoming period. The InvestingPro Tips also highlight the company's weak gross profit margins, which could be a point of concern for potential investors.
For a more comprehensive analysis, including additional InvestingPro Tips that can offer further clarity on TreeHouse Foods' potential, interested readers may consider an InvestingPro subscription. There are currently 14 additional tips available on InvestingPro that could help investors make a more informed decision. Moreover, by using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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