McCormick (MKC, Financial) has experienced a reduction in its price target from $80 to $77 by Citi analyst Thomas Palmer. The adjustment, accompanied by a maintained Neutral rating, comes ahead of the company's fiscal Q2 report scheduled for June 26. The firm anticipates organic sales growth and earnings to fall slightly below market expectations. While the Consumer segment shows potential for gains, challenges in Flavor Solutions and an increased tax rate are expected to counterbalance this. Furthermore, Citi highlights potential risks to McCormick's fiscal 2025 forecasts, primarily due to tariffs, which could lead to reduced estimates. Despite the stock's decline since April, these concerns seem partially embedded in the current share price, according to the analyst's assessment.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 14 analysts, the average target price for McCormick & Co Inc (MKC, Financial) is $84.46 with a high estimate of $101.00 and a low estimate of $69.11. The average target implies an upside of 14.34% from the current price of $73.87. More detailed estimate data can be found on the McCormick & Co Inc (MKC) Forecast page.
Based on the consensus recommendation from 16 brokerage firms, McCormick & Co Inc's (MKC, Financial) average brokerage recommendation is currently 2.5, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for McCormick & Co Inc (MKC, Financial) in one year is $82.42, suggesting a upside of 11.57% from the current price of $73.87. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the McCormick & Co Inc (MKC) Summary page.
MKC Key Business Developments
Release Date: March 25, 2025
- Total Organic Sales Growth: Increased by 2%, driven by volume and product mix growth.
- Global Consumer Segment Organic Sales: Increased by 1%, with 3% volume growth offset by a 2% pricing impact.
- Global Flavor Solutions Segment Organic Sales: Increased by 3%, driven by 2% volume growth and a 1% price contribution.
- Gross Profit Margin: Expanded by 20 basis points, primarily due to the Comprehensive Continuous Improvement program.
- Adjusted Operating Income: Decreased by 5%, or 3% in constant currency, due to increased SG&A expenses.
- Adjusted Earnings Per Share: $0.60, compared to $0.63 in the prior year, impacted by increased SG&A and currency effects.
- Cash Flow from Operations: $116 million, down from $138 million in the previous year, due to higher working capital usage.
- Capital Expenditures: $37 million, with fluctuations expected based on project timing.
- 2025 Financial Outlook: Maintained guidance with expected organic net sales growth of 1% to 3% and adjusted EPS growth of 5% to 7% in constant currency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- McCormick & Co Inc (MKC, Financial) reported a 2% increase in total organic sales for the first quarter, driven primarily by volume and product mix growth.
- The Global Consumer segment saw volume-led organic sales growth, with robust performance across key markets.
- The company achieved strong volume growth in all three regions, supported by investments in brand marketing, innovation, and expanded distribution.
- The Flavor Solutions segment also experienced volume-led organic sales growth, with improvements in QSR customer performance in Asia Pacific and the Americas.
- McCormick & Co Inc (MKC) maintained its 2025 financial outlook, expecting gross margin expansion and operating income growth on a constant currency basis.
Negative Points
- The first quarter adjusted operating income declined by 5%, impacted by increased SG&A expenses and stock-based compensation shifts.
- Consumer sentiment remains uncertain due to inflation concerns, impacting consumer behavior and spending patterns.
- The Flavor Solutions segment faced challenges with softness in larger CPG customer volumes, particularly in the Americas and EMEA.
- The foodservice environment remains challenging, with flat performance in branded foodservice in the Americas and soft QSR traffic in EMEA.
- Currency fluctuations negatively impacted adjusted earnings per share by approximately $0.03 per share.
