MGP Ingredients Poised For Growth: Analyst Praises Whiskey Orders And Acquisition Upside

Truist Securities analyst Bill Chappell reiterated a Buy rating on MGP Ingredients, Inc. MGPI, raising the price target to 140 from 125.

MGP Ingredients' whiskey orders for a majority (>50%) of its new and aged whiskey are primarily locked in for 2024, the analyst notes. 

The analyst applauds the processes the company has put in place to manage customer orders better and cater to the increased demand for MGPI's new distillation capabilities. 

With incredibly strong visibility for the brown spirits business, improving operating metrics across the board, and upside potential from recent and future acquisitions, the analyst believes that the stock has a long way to run.

For Premium Branded Spirits, management indicated that orders returned to normal in June, which bodes well for the growth prospects in 2H.

In addition, the White Goods business, which the company is exiting, will be not only highly accretive to margin in 2024 but also accretive to EPS.

Chappell raised estimates for FY23 in line with revised guidance (Sales estimate raised to $826.4 million from $822.0 million, and EPS raised to $5.42 from $5.10.

The analyst also raised the 2024 sales estimate to $842.9 million from $856.1 million and the EPS estimate to $6.32 from $5.40.

Overall, the analyst is pleased with the business's momentum and the company's evolution into a true premium spirits company.

Price Action: MGPI shares are trading higher by 1.79% to $122.66 on the last check Monday.