Lamb Weston To Expand French Fry Capacity in China

Lamb Weston Holdings has announced a $250 million investment to expand its French fry processing capacity in China with a new processing facility. The company supplies frozen potato products around the world.

Lamb Weston (LW) President and CEO, Tom Werner said, “The french fry category is poised for growth globally, and china continues to be a critical market for us.”

Werner further added, “This investment of in-country production for the China market is a clear example of our commitment to our strategic customers and supporting their growth plans well into the future.”

The new facility in Inner Mongolia will be able to produce more than 250 million pounds of frozen French fries and other products every year. Lamb Weston expects the construction of the facility to be completed in fiscal 1H 2024.

Additionally, the company also announced a quarterly dividend of $0.235 per share to be paid to shareholders of record on May 7. (See Lamb Weston stock analysis on TipRanks)

Recently, Jefferies analyst Robert Dickerson assigned the stock a Hold rating with an $80 price target. Commenting after the company’s 2Q release, Dickerson said, “While lamb’s 2Q results were generally in-line with expectations, management’s near-term outlook pointed to more pressured volumes y/y sequentially in 3Q, driven by heightened government imposed social restrictions combined with the reduced cold winter restaurant demand.”

Dickerson added, “Given a pressured 3Q should have been somewhat known, 4Q should be the return to growth…the momentum in Lamb’s stock could easily continue, as long as the pricing and competitive backdrop remains stable.”

The other analyst covering the stock, Barclays’ Andrew Lazar has a Buy rating on the stock with an $84 price target. The two ratings add up to a Moderate Buy consensus rating with an average analyst price target of $82, which implies upside potential of around 3% from current levels. Shares have rallied 41.7% over the past year.

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