On Thursday, Piper Sandler adjusted its outlook on Post Holdings (NYSE: NYSE:POST) shares, reducing the price target from $140.00 to $120.00 while maintaining an Overweight rating on the company's stock. The adjustment comes as the analyst firm revises its sales growth estimates for Post Holdings’ F1Q25, citing slower retail momentum as a key factor.
The firm also updated its financial model to account for increased EBITDA margin pressure on Post Holdings’ Weetabix brand due to its Enterprise Resource Planning (ERP) transition. Additionally, the Refrigerated Retail segment faces a challenging comparison as it laps a Walmart-funded promotion from the previous fiscal year's first quarter.
Piper Sandler has also incorporated the impending acquisition of Potato Products of Idaho into Post Holdings’ financial model. The acquisition is expected to close towards the end of F2Q25. The company recently reported an avian influenza outbreak at one of its third-party contracted egg-laying facilities. However, Post Holdings anticipates that the impact will remain within the guidance range provided.
As a result of these factors, Piper Sandler has lowered its F25E earnings per share (EPS) estimate for Post Holdings from $5.60 to $5.55 and its F26E EPS from $6.80 to $6.79. The firm also adjusted the valuation multiple to approximately 10.0 times from the previous 11.0 times, aligning it more closely with the company's five-year historical average, and shifted the valuation base to a calendar year 2026 estimate.
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In other recent news, Post Holdings has confirmed its intent to acquire Potato Products of Idaho, a move that includes taking over a manufacturing facility in Rigby, Idaho. The financial specifics of the deal have not been disclosed, and the acquisition is slated to be finalized in the first calendar quarter of 2025.
This strategic step expands Post's portfolio in the consumer packaged goods sector, particularly in the refrigerated and frozen potato product categories. Meanwhile, Lamb Weston's shares fell by 5% following this announcement.
In the wake of this acquisition news, Post Holdings also completed the redemption of its remaining 5.625% senior notes due in 2028, with an aggregate principal amount of $464.9 million. The company also reported a solid performance in its fourth-quarter earnings for the fiscal year 2024, with a 45% increase in adjusted EBITDA over the last two years.
Evercore ISI analyst upgraded the price target for Post Holdings to $126.00, maintaining an Outperform rating on the stock. The analyst noted a 3% year-over-year growth in the FY25 EBITDA estimate, which now stands at $1.447 billion.
Despite a recent case of avian influenza at a contracted third-party egg-laying facility in Iowa, Post Holdings has confirmed its fiscal year 2025 Adjusted EBITDA forecast, ranging from $1,410 million to $1,460 million.
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