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Scotts Miracle-Gro can be a smart play in an uncertain economic environment given its business’s strong performance in prior times of turmoil, according to Truist Securities. Analyst Bill Chappell upgraded the Ohio-based lawn care stock to buy from hold and reiterated a 12-month price target of $70, suggesting possible 28% upside over Tuesday’s closing level. “In our opinion, the [U.S.] lawn and garden category has finally normalized post-Covid,” Chappell wrote to clients in a Wednesday note. “The category and the company are well positioned to navigate the macroturbulence expected to impact the consumer over the next year and the valuation of the stock is highly attractive on a historical basis.” Scotts Miracle-Gro can act as a “safe haven for stormy weather” in the event consumer spending slows, Chappell said. That’s because when people cut back on travel in times of economic concern, they spend more time in their backyards, and put more dollars into improving them. That happened in both the Great Recession in 2008-2009, and the Covid pandemic, the Truist analyst said. Lawn care spending has finally returned to “normal” after a dramatic spike higher during the pandemic, Chappell noted. Going forward, the analyst said to expect growth in the low-to-mid single digits, about the rate that prevailed before the pandemic. Chappell also said that investors can expect less-volatile quarterly earnings reports in the future, as Scotts should be better able to project demand and expenses Scotts shares added 0.6% in Wednesday premarket trading, a reprieve from this year’s 17% decline. SMG YTD mountain Scotts Miracle-Gro, year to date Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
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