On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on Lamb Weston (NYSE:LW), a leading frozen potato product company, by reducing the price target to $63.00 from the prior $81.00. The firm has maintained a Hold rating on the shares.
The adjustment follows a significant drop in Lamb Weston's share price, which tumbled over 20% after the company reported disappointing quarterly results and issued a lower guidance, contrasting with the S&P 500's marginal gain of 0.1%.
The market is now questioning whether the revised guidance from Lamb Weston's management has sufficiently accounted for all potential issues, a concept referred to as "kitchen sinking." Investors and analysts are looking to see if the company has set realistic expectations to avoid further guidance reductions, stabilize its revenue and margins, and ultimately return to a pattern of growth in the remainder of fiscal year 2025 and into fiscal year 2026.
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Lamb Weston also shared a grim forward-looking commentary, noting challenges such as weakening demand in key international markets, increasing competition both domestically and internationally, and difficulties in regaining customers. The company also indicated that it expects medium-term EBITDA margins to be only between 19%-20%. Additionally, the announcement of a CEO transition, with the promotion of the current COO Mike Smith to the role, did not instill confidence among investors.
The market is now questioning whether the revised guidance from Lamb Weston's management has sufficiently accounted for all potential issues, a concept referred to as "kitchen sinking." Investors and analysts are looking to see if the company has set realistic expectations to avoid further guidance reductions, stabilize its revenue and margins, and ultimately return to a pattern of growth in the remainder of fiscal year 2025 and into fiscal year 2026.
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