Lamb Weston May Keep Cutting Prices To Win Back Market Share, But Demand Recovery Remains Uncertain

J.P. Morgan analyst Ken Goldman reiterated the Neutral rating on Lamb Weston Holdings, Inc. LW on Thursday, raising the price forecast from $65 to $66.

Goldman cited medium-term risks tied to an ongoing supply and demand imbalance in the French fry market.

Yesterday, the company reported third-quarter adjusted earnings per share of $1.10, beating the analyst consensus estimate of 87 cents. Quarterly sales of $1.521 billion (up 4% year over year) outpaced the street view of $1.492 billion.

The analyst noted that while the industry holds long-term growth potential, current conditions present uncertainty, and visibility beyond the near term remains limited.

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Goldman also projects that the company will continue adjusting prices to regain market share, but expressed doubts about whether demand will grow fast enough to match supply in the coming years. Still, the analyst acknowledged the long-term appeal.

The analyst highlighted the difficulty in forecasting Lamb Weston's performance beyond the upcoming quarter due to several uncertainties surrounding fiscal year 2026.

Goldman noted potential upside factors such as new customer contracts, lower potato input costs in North America, greater-than-expected cost savings, and increased share repurchases.

Additionally, the analyst pointed out that FY26 will include an extra week, which could positively affect results.

Meanwhile, Goldman also flagged several risks, including ongoing pricing initiatives to win business without guaranteed cost deflation, persistent challenges in the quick-service restaurant sector, a possible rise in overall fry supply, and uncertainties tied to tariffs.

Price Action: LW shares are trading lower by 0.55% to $59.25 at last check Friday.

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