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Stifel upgrades this fertilizer manufacturer following earnings beat
Published
5 months agoon
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Stifel has increased conviction in Scotts Miracle-Gro’s near-term strength and margin profile. The investment firm upgraded the fertilizer manufacturer to buy from hold. Analyst W. Andrew Carter maintained his $70 price target, “assuming SMG shares approach parity with consumer staples peers.” Shares of Scotts Miracle-Gro have shed 16% this year, but Carter’s forecast implies that they could rally 25% from here. SMG YTD mountain SMG YTD chart Carter’s upgrade follows Scotts Miracle-Gro’s fiscal fourth-quarter release on Wednesday. The company reported an adjusted loss of $1.96 per share, which was more narrow than the $1.98 analysts polled by FactSet had expected. “We are surprised at the muted reaction post F4Q25 earnings given the pressure ahead of earnings. Initial FY26 EPS guidance outpacing our estimates including what we regard as a pragmatic revenue growth outlook enabled by a gross margin trajectory above our expectations,” Carter wrote. “Against an imperfect environment, we believe SMG has performed well validating SMG’s leading position and the category’s resilience with SMGs importance to retailers amplified amid an extended home improvement category malaise.” Carter raised his estimate for the company’s fiscal 2026 earnings to $4.26 per share from $4.07 per share. “We believe SMG is now able to fully unlock efficiencies previously not available given the focus on cash and considerations around shipment timing,” he said. “We came away from our management callback with greater appreciation for the enhanced ability to target inefficiencies as SMG approach target leverage.” The stock rose more than 1% in the premarket following the upgrade. Analysts are generally split on the stock. Of the nine who cover it, four rate it a hold, while the remaining five assigned buy or strong buy ratings, according to LSEG.
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