J.M. Smucker Co (NYSE:SJM) is likely to continue outperforming center store food peers as the company is &#34;executing where peers struggle,&#34; with further upside from potential Hostess divestiture, according to Bank of America analyst Peter Galbo



The J.M. Smucker Analyst: On the heels of its fiscal fourth-quarter report, Galbo maintained his Buy rating for J.M. Smucker. He also raised the price target from $130 to $132.



The J.M. Smucker Thesis: Despite significant macro headwinds, the company guided fiscal 2027 earnings at $10 per share at the midpoint, Galbo said in the note.



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J.M. Smucker's flat net sales guidance for the first quarter of fiscal 2027 appears conservative, given that the Nielsen scanner data for May suggests around 5% year-on-year growth, the analyst stated. 



The guidance reflects that low-single-digit pricing growth is offset by volume and mix, while coffee deflation could have a stronger impact starting in the fiscal second quarter, he added.



For adjusted earnings growth, management expects:



<ul>
<li>Mid-teens growth in the first quarter</li>



<li>Accelerate above mid-teens in the second quarter</li>



<li>Decelerating to low-single-digit growth in the third quarter</li>



<li>Flat to slightly down in the fourth quarter</li>
</ul>



Strong Fundamentals: The company's balance sheet is strong and cash flow generation consistent, with fiscal 2027 guidance of around $1 billion in free cash flows, Galbo noted.



Management indicated that share buybacks may be reconsidered after the debt paydown of around $500 million, he added.



&#34;Capital allocation remains focused on sustaining FCF through reinvestment, modest dividend growth, and deleveraging, with M&amp;A sidelined near term,&#34; the analyst wrote. Buybacks are more likely in fiscal 2028, he further stated.



JM Price Action: Shares of J.M. Smucker had risen by 2.89% to $115.64 at the time of publication on Wednesday.



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BofA analyst Peter Galbo raised J.M. Smucker's price target to $132 and maintained a Buy rating, citing strong execution against peers and potential upside from the Hostess divestiture. Despite macro headwinds, the company guided for $10 EPS in fiscal 2027 with robust free cash flow generation. The analyst noted conservative Q1 sales guidance and expects share buybacks to resume in fiscal 2028 after debt reduction.

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JM Smucker

Bank of America

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Bank of America Corp

This JM Smucker Analyst Raises Price Target After Q4 Print, Is 'Executing Where Peers Struggle'