UBS bullish on Kerry Group stock with strong Taste & Nutrition volume growth forecast By Investing.com

On Friday, UBS analyst maintained a Buy rating on Kerry Group PLC (KYG:ID) (OTC: KRYAY) stock with a price target of €105.00. The firm anticipates Kerry Group to announce its third-quarter results for 2024 on October 24.

The analyst forecasts that the Taste & Nutrition (T&N) segment will experience a volume growth of 3.4% in the third quarter, which is slightly higher than the previous estimate of 3.0% and above the Visible Alpha consensus of 3.1%. This expected growth marks a continued acceleration from 3.2% in the second quarter and 3.1% in the first quarter.

At the group level, UBS projects a third-quarter organic sales growth (OSG) of 3.7%, consistent with their prior estimate. This figure comprises a 3.7% year-over-year volume growth, up from the previous estimate of 3.3%, and a stable pricing at 0.0%, adjusted from an earlier forecast of 0.4% pricing. These projections are more optimistic compared to the consensus, which anticipates a 2.6% OSG with 3.3% volume growth and a 0.7% decline in pricing.

For Kerry Dairy Ireland (KDI), UBS expects a robust 5.0% volume growth, aligning with their previous forecast and surpassing the consensus estimate of 3.8%. In terms of divisional pricing, the analyst now predicts a 0.9% decline in pricing for T&N, a slight dip from the earlier forecast of a 0.5% decrease and more favorable than the consensus view of a 1.1% reduction. Meanwhile, KDI’s pricing is anticipated to rise by 5.4% year-over-year, matching UBS’s earlier prediction and starkly contrasting with the consensus, which expects a 0.3% decline.

In other recent news, Kerry Group has received considerable attention from analysts. Deutsche Bank has raised its price target for Kerry Group to €86.00, maintaining a Hold rating on the stock. The bank anticipates a 2.1% increase in the company’s organic sales for the third quarter, primarily driven by a projected 2.9% increase in volumes.

Furthermore, the company’s EBITDA margin for the third quarter is expected to rise by approximately 70 basis points year-over-year, with the Taste & Nutrition division seeing a 60 basis point increase.

In another development, Barclays has upgraded Kerry Group’s stock from Equalweight to Overweight, raising the price target from €90.00 to €97.00. The upgrade is attributed to the company’s resilient earnings momentum and a strategic shift in capital allocation, with more free cash flow projected to be returned to shareholders through continued share buybacks in 2025 and 2026.

Lastly, an analyst at Jefferies revised the price target for Kerry Group from EUR 84.00 to EUR 86.00, maintaining a Hold rating on the stock. The analyst expects a modest improvement in volume growth for the full year 2024, largely due to increased innovation and promotional activities. These recent developments underscore the analysts’ positive outlook for Kerry Group, particularly in terms of its earnings and capital strategy.

InvestingPro Insights

As Kerry Group PLC (KRYAY) approaches its third-quarter earnings report, several metrics from InvestingPro highlight the company’s financial health and market performance. Importantly, Kerry Group has demonstrated a commitment to shareholder returns, having raised its dividend for 33 consecutive years and maintained dividend payments over the same period, signaling a strong track record of financial stability and reliability.

In terms of market performance, the company’s shares are trading near their 52-week high, reflecting a robust price momentum with a 27.22% return over the last three months. This is a testament to the company’s resilience and the positive sentiment among investors leading up to the earnings release. Additionally, analysts predict that Kerry Group will be profitable this year, a forecast that is supported by the company’s profitability over the last twelve months.

InvestingPro data also provides a snapshot of the company’s valuation and profitability. With a market capitalization of $17.79 billion and a Price/Earnings (P/E) ratio of 22.83, Kerry Group is positioned within the market at a valuation that investors may find attractive given its stable earnings profile. The company’s Gross Profit Margin stands at a healthy 44.4%, indicating efficient operations and a strong ability to translate sales into profits.

For readers interested in a deeper analysis and additional insights, there are more InvestingPro Tips available for Kerry Group PLC at https://www.investing.com/pro/KRYAY, offering a comprehensive view of the company’s financial and market performance.

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