TD Cowen cuts Simply Goods stock price target on sales outlook

TD Cowen has decreased its price target for The Simply Goods Group (NASDAQ:SMPL) stock to $11 from $13, while keeping a Hold rating on the shares. The company's stock is presently trading at $10.71, marking a 62% decline over the past year and boasting a market capitalization of $950 million. TD Cowen has adjusted their fiscal 2027 sales estimate downward by 6%, in line with other analysts' forecasts.

They have, however, kept their EBITDA growth projection at a negative 1% for the period. Analysts anticipate a recovery in gross margins due to pricing and productivity improvements, which they believe will counterbalance the impact of declining volumes. Losses on distribution for Atkins and OWYN products, coupled with persistent challenges for Quest bars, are anticipated to further dampen volume growth, with the trajectory of fiscal 2028 improvements remaining uncertain.

To calculate this revised price target, TD Cowen uses an EV/EBITDA multiple of 5.5 times their projected forward 12-month EBITDA. Currently, the company's EV/EBITDA stands at 5.95 times based on the past twelve months, which is significantly lower than its three-year average of 11.6 times. This discount is attributed to the uncertainty surrounding the company's return to growth.

Despite this cautious outlook, an InvestingPro analysis suggests the stock could be undervalued at present levels. The tip notes that 6 analysts have lowered their earnings forecasts for the upcoming period, with a total of 10 additional premium insights available to subscribers. The Simply Good Foods Group recently disclosed its third-quarter fiscal 2026 earnings, which exceeded expectations due to stronger-than-anticipated top-line growth and reduced general and administrative expenses.

The company also modestly increased its sales outlook, although EBITDA remained relatively stable. In response to these developments, different analysts have revised their ratings and price targets. Stifel has upgraded its rating to Buy, with a $20.00 price target, highlighting the company's strategic direction. UBS has increased its target price from $12.00 to $15.00 and maintained a Neutral rating based on the improved sales outlook.

Conversely, DA Davidson has lowered its price target from $39.00 to $14.00, attributing this move to the company's ongoing uncertainty in achieving its turnaround goals, despite robust performance from its Quest and OWYN brands. TD Cowen's Hold rating and $13.00 price target acknowledge that Simply Good Foods' results surpassed more conservative estimates, yet they point out that the company's fiscal 2026 guidance did not fully capture all potential upside.

These recent updates illustrate a blend of optimism and caution among analysts concerning the company's future trajectory.