With a market cap of $10.9 billion, Lamb Weston Holdings, Inc. (LW) is a global leader in producing, marketing, and distributing value-added frozen potato products, including French fries and appetizers. The Eagle, Idaho-based company serves retail and food service customers across various channels, including restaurants, distributors, and retailers worldwide.
Shares of the frozen foods supplier have significantly underperformed the broader market over the past 52 weeks. LW has declined 21.8% over this time frame, while the broader S&P 500 Index ($SPX) has gained 31.1%. In 2024, shares of LW are down nearly 29%, compared to SPX’s 24.7% increase on a YTD basis.
Narrowing the focus, LW has also lagged behind the Consumer Staples Select Sector SPDR Fund’s (XLP) 16.4% rise over the past 52 weeks and 12.6% return on a YTD basis.
Lamb Weston Holdings stock rose nearly 3% following its positive Q1 2025 release on Oct. 1, with $1.7 billion in net sales surpassing the analyst forecast and adjusted earnings of $0.73 per share meeting estimates. The company also unveiled a restructuring plan to close a costly processing facility, reduce production schedules, and lower operating expenses to address supply-demand imbalances in North America. This strategic move and reaffirming its revenue guidance of $6.6 billion to $6.8 billion helped offset concerns about declining income and weak frozen potato demand, boosting investor confidence.
Moreover, Lamb Weston’s stock climbed 10.2% on Oct. 18 after activist investor Jana Partners disclosed a 5% stake and expressed intentions to push for a sale, citing operational issues such as poor capacity utilization and declining performance. The market reacted positively, expecting Jana’s involvement to lead to improvements and a potential strategic shift to boost the company's value.
For the current fiscal year, ending in May 2025, analysts expect LW’s EPS to decline 16.1% year-over-year to $4.26. The company’s earnings surprise history is mixed. It beat or met the consensus estimates in two of the last four quarters while missing on two other occasions.
Among the nine analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buy” ratings and four “Holds.”
This configuration is less bullish than three months ago, with seven “Strong Buy” ratings on the stock.
On Oct. 22, Citi analyst Thomas Palmer raised Lamb Weston's price target to $90 - the Street-high price target and maintained a “Buy" rating, citing potential upside from volume recovery, operating leverage, improved pricing, and activism by Jana Partners. This implies a potential upside of 17.3% from the current price.
The mean price target of $81.89 represents a premium of only 6.7% to LW’s current levels.
