McCormick & Company: Sell Rating Maintained Amid Underperformance and Challenging Growth Outlook

October 4, 2023
MediaIntel.Asia

Adam Samuelson, an analyst from Goldman Sachs, has initiated a new Sell rating on McCormick & Company (MKC).
Adam Samuelson has given his Sell rating due to a combination of factors which impacts McCormick & Company’s stock (MKC). Samuelson has observed that despite MKC’s quarterly EPS aligning with GSe/Refinitiv Consensus and a mild increment in FY23 EPS guidance due to increased equity earnings, the stock underperformed the broader market. This underperformance was accompanied by weaker-than-expected organic volumes and constant currency sales growth, which are critical for the stock’s future trajectory. Some of the reasons attributed to this performance include a slower recovery in China post-COVID, smaller business/product-line exits, and a sluggish consumer environment for packaged food.
In addition to these factors, Samuelson notes that while the quarter’s results were largely in line with expectations, particularly the improved margin performance in Flavor Solutions, the volume performance and measured sales growth in core consumer categories make a price-led top-and-bottom line growth outlook for FY24 more challenging to uphold. Samuelson also highlights that with MKC’s shares trading at a premium compared to its growth food peers, the valuation risk/reward balance appears unattractive. Taking into account these factors, Samuelson has slightly adjusted his estimates and lowered his 12-month target to $64, thus maintaining his Sell rating.
Samuelson covers the Consumer Defensive sector, focusing on stocks such as Cal-Maine Foods, International Flavors & Fragrances, and McCormick & Company. According to TipRanks, Samuelson has an average return of 5.6% and a 43.36% success rate on recommended stocks.
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McCormick & Company (MKC) Company Description:
Founded in 1889, McCormick & Co., Inc. is a Maryland-based food company, which is engaged in the manufacturing, marketing and distribution of spices, seasoning mixes, condiments and other flavorful products to retail outlets, food manufacturers and foodservice businesses. It operates through the following two segments: Consumer and Flavor Solutions.
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This data comes from MediaIntel.Asia's Media Intelligence and Media Monitoring Platform.



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