TD Cowen lowered its price target on The Simply Good Foods Group (NASDAQ: SMPL) to $11 from $13 on Wednesday, maintaining a Hold rating as concerns over volume declines in core brands outweigh near-term margin improvements.
The firm’s EV/EBITDA multiple of 5.5x for the next 12 months, applied to its revised fiscal 2027 estimates, reflects a discount to the stock’s three-year average of 11.6x. Simply Goods’ current EV/EBITDA stands at 5.95x based on trailing figures, indicating limited valuation headroom under TD Cowen’s framework.
Volume growth is expected to remain under pressure through fiscal 2028 due to distribution losses on Atkins and OWYN products, compounded by ongoing weakness in Quest bars. While TD Cowen anticipates gross margin recovery from pricing actions and productivity gains, the firm reduced its fiscal 2027 sales estimate by 6% to align with consensus, leaving EBITDA growth flat at negative 1% for the period.
The downgrade follows third-quarter fiscal 2026 results that topped expectations, with better-than-expected revenue growth and lower-than-projected general and administrative expenses. The company modestly raised its sales outlook for the year while maintaining its EBITDA guidance, though visibility on a return to growth remains limited.
Other analysts have also adjusted targets: UBS raised its target to $15 from $12 but kept a Neutral rating, while DA Davidson cut its target to $14 from $39. Stifel maintained its $20 target with a Buy rating. The stock has declined 62% over the past year and was trading at $10.71 on Wednesday, giving the company a market capitalization of $950 million.
InvestingPro data shows six analysts have revised earnings downward for the upcoming period, underscoring broader skepticism despite the company’s recent operational execution.
