Stephens cuts Lamb Weston stock price target on Europe concerns

Stephens, an investment firm, reduced its price target on Lamb Weston Holdings stock from $55 to $50 while keeping an Equal Weight rating. The stock is currently trading at $43.58, having dropped nearly 8% over the past week. Stephens attributes the adjustment to a deteriorating European potato crop, with extreme heat causing lower acreage, weaker yields, and smaller potato sizing.

The 2026 European potato crop has worsened since Lamb Weston's earnings call in July, and Stephens now expects a more gradual recovery. This increased uncertainty around procurement costs for fiscal year 2027. Analysts have revised their earnings downwards for the upcoming period, aligning with the firm's concerns. Lamb Weston is expected to report earnings in eight days.

Stephens believes investors will need more evidence that industry supply-demand dynamics are becoming more balanced before becoming more constructive on the stock. Despite recent challenges, Lamb Weston's long-term earnings power should benefit from its Focus to Win initiatives, footprint optimization, and improved customer relationships.