Shares of J.M. Smucker rose about 7% on Tuesday after the food producer raised its guidance for the fiscal year 2021 (ending in April 2021) and reported stronger-than-expected 1Q financial results.
Smucker (SJM) reported adjusted earnings of $2.37 per share, beating analysts’ estimates of $1.67 per share. Its 1Q revenues of $1.97 billion also came ahead of Street estimates of $1.81 billion. Earnings and revenues grew 50% and 11%, respectively, on a year-over-year basis. Robust growth in the company’s US and international retail businesses was driven by increased at-home consumption of coffee and consumer goods.
Despite the COVID-19 uncertainty, the company expects continued momentum in 2Q and raised the fiscal-year guidance. Smucker expects fiscal 2021 sales to range from flat to up 1%, versus the prior forecast of a decline of 1% to 2%. 2021 earnings are forecast in the range of $8.20 to $8.60 per share, versus the earlier guidance of $7.90 to $8.30 per share. (See SJM stock analysis on TipRanks).
Following 1Q results, Jefferies analyst Robert Dickerson maintained a Hold rating on the stock with a price target of $127 (5.2% upside potential). He views Smucker’s guidance as “conservative” and expects “to see positive revisions continue.” He added that “We simply remain sidelined given implied stock upside from here after today’s run and off our out-year forecasts.”
Currently, the Street has a cautious outlook on the stock. The Hold analyst consensus is based on 6 Holds and 2 Sells. Given the year-to-date share price gain of about 16%, the average price target of $114.38 implies downside potential of about 5.3%.
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