J.M. Smucker (SJM) is set for stronger earnings growth through fiscal 2027 as coffee trends improve, other brands gain momentum, cash flow rises and the company leaves room for further guidance increases, UBS said in a note emailed Thursday.
The company's updated fiscal 2027 outlook still looks cautious, with adjusted earnings per share now expected at $10.50 to $11 and net sales expected to fall 1% to 2% as coffee results could come in better than management expects since demand has held up well, while lower coffee costs should start helping the business, according to the note.
UBS said it also expects brands including Uncrustables, Cafe Bustelo and Meow Mix to support growth, while the Hostess business could improve later in the fiscal year.
J.M. Smucker is also ahead of schedule on debt reduction and reinvestment plans, while free cash flow guidance has increased by $100 million to about $1.1 billion, the investment firm said.
UBS maintained its buy rating for J.M. Smucker and raised its price target to $149 from $142.
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