Bank of America double upgrades McCormick, calls seasoning stock a ‘growthy staple’
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Bank of America thinks spice maker McCormick has growth-like characteristics that will push its stock higher. The firm double-upgraded the condiments stock to buy from underperform on Tuesday, with a $100 per share price target up from $75. BofA’s new forecast implies nearly 13% upside from Monday’s $88.76 close. Analyst Peter Galbo said the company is set for smooth sailing as volume pressures have eased and margins and costs improved. “Across our coverage universe, investors are focused on the transition from price led sales growth to volume led. In our view, MKC holds potential to be a ‘winner’ in this debate,” the analyst said, calling the stock a “growthy staple.” Shares of McCormick are up more than 6% year to date, outperforming the Consumer Staples Select Sector ETF (XLP), which is down 1.3%. MKC YTD mountain McCormick stock has ticked up more than 7% so far this year. Galbo said this outperformance should continue. “We expect potential for positive estimates revisions and a market bias for consumer ‘growth’ stocks could drive valuation back to its historical mid-30’s P/E over the next 12 months,” he said. The analyst also sees strong sales in key segments such as America consumer and EMEA flavor solutions. — CNBC’s Michael Bloom contributed to this report.
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