Jefferies sees margin recovery for J&J Snack, Hostess Brands, raises PTs

Hostess Brands

09/12/2022 18:23

** Jefferies raises PT on snack and beverages distributor
J&J Snack Foods Corp  JJSF.O  to $170 from $141  
    ** As supply-chain stability improves and pricing catches up
with elevated costs, gross margin should gradually revert to
pre-pandemic levels, says brokerage
    ** Jefferies, however, sees "profitability risk" in near
term
    ** Brokerage also raises PT on Twinkies maker Hostess Brands
Inc  TWNK.O  to $30 from $26
    ** "TWNK possesses low private label category exposure vs
many food companies, sells affordable products, and continues to
support its brands via innovation/brand support" - brokerage
    ** With incremental pricing, supply-chain easing and
potential fall in input costs, Jefferies sees high-single-digit
EBITDA growth feasible next fiscal; reiterates "buy" rating on
TWNK
    ** Three of 5 brokerages rate JJSF "buy" or higher, 2
"hold"; median PT is $165 - Refinitiv
    ** Nine of 11 brokerages rate TWNK "buy" or higher, 2
"hold"; median PT is $30 - Refinitiv
    ** YTD, shares of J&J Snack down ~0.4%, while Hostess Brands
up ~21%
 (Reporting by Granth Vanaik in Bengaluru)
 ((Granth.Vanaik@thomsonreuters.com))