Simply Good Foods ‘ diverse product offering could provide it an edge over market competitors, according to Morgan Stanley. The firm upgraded Simply Good Foods to an overweight rating from equal-weight on Monday, simultaneously bumping up its price target to $40 from $37. This implies an upside of 18% from Friday’s close of $33.86. Shares of the food and beverage company have plunged almost 11% since the start of the year, creating an “attractive buying opportunity,” analyst Pamela Kaufman wrote. SMPL YTD mountain simply good foods ytd chart Kaufman said that Simply Good Foods could be a key beneficiary as consumer preferences shift towards healthier choices that support weight management and an active lifestyle. “Active Nutrition is a ~$10 billion category that has been growing rapidly, at a 14% CAGR [compounded annual growth rate] over the last five years,” the analyst wrote. “SMPL is well positioned given its portfolio of high protein, low carb and low sugar snacks, spanning multiple categories.” The analyst also cited Simply Good Foods’ above-average topline growth within the packaged food industry. Kaufman expects the company’s sales growth to slow to 5.1% in 2024 versus its 5.8% growth average between 2023-2025, but said this new rate still “compares favorably” against competitors. “SMPL’s solid topline growth outlook is an increasingly scarce asset in a group that is facing slowing topline growth and should support its valuation premium,” she said. — CNBC’s Michael Bloom contributed to this report.
