Headquartered in Eagle, Idaho, Lamb Weston Holdings, Inc. (LW) is a leading global supplier of frozen potato products to restaurants and retailers. Valued at a market cap of $8.9 billion, the company is renowned for its diverse product lineup, including fries, mashed potatoes, and various other potato-based offerings.
Shares of this leading packaged food manufacturer have underperformed the broader market considerably over the past year. LW has plummeted 34.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 28.1%. In 2024, LW’s stock fell 42.8%, compared to the SPX’s 17.3% rise on a YTD basis.
Narrowing the focus, LW has failed to surpass the First Trust Nasdaq Food & Beverage ETF (FTXG). The exchange-traded fund has declined about 2% over the past year. Moreover, the ETF’s 3.3% returns on a YTD basis outpace LW’s double-digit losses in 2024.
On Jul. 24, LW stock plunged a whopping 28.2% after the company released its fiscal Q4 2024 results. Its net sales declined by 5% year-over-year to $1.6 billion, and adjusted net income plummeted 40% to $113.7 million. CEO Tom Warner noted disappointing price/mix results, market share losses, and slower restaurant traffic. The results also missed analysts' expectations of $1.7 billion in revenue and $1.24 per share in adjusted net income. Additionally, the company's fiscal 2025 guidance fell short of projections.
For the fiscal year ending in May 2025, analysts expect Lamb Weston’s EPS to decline 10.6% to $4.54 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in two of the last four quarters while missing on two other occasions.
Among the 10 analysts covering LW stock, the consensus is a “Moderate Buy,” a step down from “Strong Buy” a month ago. That’s based on seven “Strong Buy” ratings and three “Holds.”
This configuration is less bullish than a month ago, with 10 analysts giving it a “Strong Buy.”
On Jul. 19, Barclays PLC (BCS) analyst Lauren Lieberman lowered the price target for Lamb Weston Holdings from $105 to $96 while maintaining an “Overweight” rating on the stock.
The mean price target of $69.40 represents a 12.2% premium to Lamb Weston’s current price levels. The Street-high price target of $79 suggests an upside potential of 27.7%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
