Lamb Weston Stock Has Attractive Entry Point Ahead Of Investor Day: Goldman Sachs

Shares of Lamb Weston Holdings Inc LW rose in early trading on Tuesday, after a deep decline over the past couple of months.

The underperformance of the stock, following a decline in fiscal fourth-quarter organic volumes, provides “an attractive entry point,” according to Goldman Sachs.

The Lamb Weston Analyst: Adam Samuelson upgraded the rating for Lamb Weston from Neutral to Buy, while raising the price target from $125 to $127.

Check out other analyst stock ratings.

The Lamb Weston Thesis: The Eagle, Idaho-based company’s ongoing efforts to improve mix, especially shifting of production to battered and coated fries, “offer the dual benefit of higher per pound pricing/margins and constrain LW (and peer) throughput to minimize oversupply risk,” Samuelson said in the upgrade note.

“In addition, the recent consolidation of LW’s EMEA JV offers fertile ground for further margin enhancement and inorganic growth, with EMEA gross margins that are ~1,000bps below the legacy NA business,” the analyst further wrote.

The stock could outperform peers, as Lamb Weston’s “idiosyncratic margin levers” become increasingly apparent, “with the company’s upcoming 10/11 investor day a key catalyst to this effect."

LW Price Action: Shares of Lamb Weston had risen by 0.67% to $97.95 at the time of publication Tuesday.