On Wednesday, Citi upgraded shares of McCormick & Company (NYSE:MKC) from Sell to Neutral and increased its price target slightly to $69 from $68. The adjustment comes ahead of the company's scheduled second-quarter earnings report for fiscal year 2024, which is set for Thursday, June 27th.
Citi anticipates that McCormick will report second-quarter sales and earnings per share (EPS) that exceed the consensus estimates from Visible Alpha. Additionally, the firm expects McCormick to raise its full-year 2024 forecasts for sales, operating profit, and EPS. Analysts have noted that consensus estimates already surpass McCormick's guidance ranges for these financial metrics.
McCormick has been recognized as one of the few large-cap food companies demonstrating improving market trends. Nevertheless, the company's stock performance has lagged in comparison to its peers over the past couple of months. This underperformance, coupled with positive sales momentum, is believed to provide a favorable backdrop for the company as it approaches its earnings announcement.
The upgraded rating and price target reflect a change in outlook for McCormick's stock, suggesting a neutral stance on its investment potential at the current valuation. The new target is set just a dollar higher than the previous one, indicating a modest revision of expectations.
Investors and market watchers will be looking to the upcoming earnings report to see if McCormick can indeed surpass the anticipated figures and provide a more optimistic outlook for the remainder of the fiscal year.
In other recent news, McCormick & Company reported a robust first quarter with earnings per share (EPS) of $0.63, a 7% growth surpassing both Stifel and consensus estimates. Despite a slight decline in volume performance, the company confirmed its financial outlook for fiscal year 2024, with sales growth ranging from -1% to +1%, operating profit to increase by 4%-6%, and EPS to rise by 5%-7%.
In addition, during its First Quarter Earnings Call, McCormick reported a 2% growth in sales in constant currency terms, despite a challenging macroeconomic environment, particularly in China.
Argus upgraded McCormick's stock status from Hold to Buy, reflecting a positive outlook on the company's potential to improve sales volumes. This is anticipated to be driven by new product introductions, improvements in packaging, and strategic pricing adjustments. Stifel also raised its price target for McCormick based on the company's sales and earnings growth potential.
In other company news, McCormick announced the appointment of Valarie Sheppard to its Board of Directors. Sheppard, a retired Executive Vice President, Controller, and Treasurer of Procter & Gamble, brings over 35 years of experience in finance and accounting to the company.
InvestingPro Insights
As McCormick & Company (NYSE:MKC) gears up for its second-quarter earnings report, a glance at the InvestingPro data reveals some key financial metrics. The company boasts a solid market capitalization of $18.41 billion, with a P/E ratio of 25.52, slightly adjusting to 24.92 when looking at the last twelve months as of Q1 2024. Despite a moderate revenue growth of 4.78% over the last twelve months, the company has managed to maintain a robust gross profit margin of 37.9%.
An InvestingPro Tip worth noting is McCormick's impressive track record of raising its dividend for 38 consecutive years, which is a testament to its financial stability and commitment to shareholder returns. Additionally, analysts predict the company will remain profitable this year, which aligns with the positive outlook expressed by Citi.
For investors seeking a deeper dive into McCormick's financial health and future prospects, there are additional InvestingPro Tips available at https://www.investing.com/pro/MKC. And for those considering an InvestingPro subscription, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With more tips at hand, including the company's debt levels and short-term obligations, investors can make a more informed decision ahead of the earnings report.
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