DA Davidson reduced its price target for The Marzetti Company to $130 from $168, citing concerns over the firm's growth strategy.
The Neutral rating was maintained as analysts noted Marzetti's strong margin execution and solid foodservice segment performance. The new target is based on 11 times projected 2027 EBITDA. Shares of Marzetti, which trades under the ticker MZTI on the NASDAQ, were down 28% over the past six months, according to InvestingPro data.
Fourth-quarter adjusted earnings per share came in at $1.46, beating Wall Street's estimate of $1.40, though revenue totaled $465.0 million, missing the expected $479.0 million. Reported net sales declined 2.2% year-over-year. Gross margins expanded by 220 basis points during the quarter, reflecting operational efficiency.
Management guided for single-to-mid-digit growth in sales and adjusted operating income for fiscal year 2027. However, adjusted operating income is projected to decline approximately 15% in the first quarter due to pressure related to Cyclospora. DA Davidson also highlighted Marzetti's reliance on acquisitions and pricing for growth, while acknowledging strong long-term potential for the Bachan's brand, which is expected to contribute over $100 million in revenue for fiscal 2027.
The stock was trading at $114.95 at the time of the report, following previous levels of $115.76 and $116.00.
