On Wednesday, TD Cowen exhibited a positive stance on WK Kellogg (NYSE:K) (NYSE:KLG) by raising its price target on the stock to $24.00 from the previous $13.00, while maintaining a Hold rating. The adjustment follows Kellogg's first-quarter EBITDA growth, which surpassed the consensus with a 13.6% increase. Despite this performance, the company's management has decided to keep its guidance unchanged.
The firm noted that Kellogg's organic sales saw a slight decline of 0.8%, which was somewhat offset by a 1% shift in retail inventory. TD Cowen's revised price target reflects a heightened confidence in Kellogg's ability to meet its 2026 EBITDA margin goal of 14%. Still, the analyst assigned a below-peer valuation multiple of 7.5 times EBITDA, citing a lack of growth in Kellogg's business model.
Kellogg's performance in the first quarter has led to a more optimistic outlook from TD Cowen, particularly regarding the company's long-term profitability targets. The increase in the price target suggests that the firm believes Kellogg is on track to achieve its financial objectives despite the current stagnation in growth.
The analyst's commentary provided insight into the rationale behind the new price target, emphasizing the company's stable EBITDA margins. The Hold rating indicates that while the analyst sees potential in Kellogg's financial goals, there are still reservations about the company's growth prospects.
Investors and market watchers will likely monitor Kellogg's progress towards its 2026 EBITDA margin target closely, as well as any changes in the company's strategy that might spur growth and potentially lead to a reassessment of its valuation multiple.
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