Simply Good Foods' (SMPL) fiscal Q3 EPS beat was driven by surprise topline growth and lower general and administrative costs, UBS said in a Thursday research report.
The brokerage said it now expects fiscal Q4 EPS of $0.42 from $0.41 earlier. It also boosted its fiscal 2026 and 2027 EPS guidance to $1.67 and $1.63, respectively, from $1.58 and $1.59 earlier.
The company also boosted its sales outlook, but earnings before interest, taxes, depreciation and amortization was largely unchanged, which implies a lower-than-expected Q4 exit rate amid ongoing input cost pressures and weaker takeaway trends, according to the note.
Simply Good Foods' return to growth will likely take some time, but investors are beginning to think that the worst phase could be over as the company takes appropriate measures to improve underlying business fundamentals, analysts wrote.
Despite elevated inflation and predictions that selling and marketing costs will trend higher, these headwinds are likely to be mostly offset by pricing actions and administrative savings, according to UBS.
The brokerage said it reiterated its neutral rating on the stock and boosted its price target to $15 per share from $12.
Price: $12.17, Change: $-0.85, Percent Change: -6.50%