On Tuesday, RBC Capital issued an update on Saputo (SAP:CN) (OTC: SAPIF), reducing the price target to Cdn$38 from the previous Cdn$39 while keeping an Outperform rating on the stock. The revision comes as the analyst anticipates a mixed environment for the company, factoring in the current commodity, operating, and geographic conditions leading up to its second fiscal quarter results.
The analyst noted that, despite the adjustments, they remain optimistic about Saputo's prospects in the long run. The fiscal year 2025 is highlighted as a pivotal year for the company, with several critical developments expected to help stabilize the business. A return to a more normal commodity backdrop is seen as a significant factor in this positive outlook.
As the company progresses through fiscal years 2025 and 2026, the analyst expects improving results driven by the full commissioning and operation at the anticipated run rate. The potential benefits of Saputo's capital investment program, which exceeds $2 billion, are also seen as a positive influence on the company's future performance.
In the United States, Saputo's segment has been identified as having optionality in controllable factors. The analyst points out that the ongoing discussions among stakeholders to revise the milk pricing formula could have favorable outcomes for the company's financials in fiscal year 2026.
The report concludes with a reminder to investors that while near-term forecasts have been moderated, the longer-term view remains constructive with the anticipation of a normalizing commodity landscape being an essential consideration for Saputo's future performance.
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