Stifel upgraded Scotts Miracle-Gro Company (NYSE:SMG) to a Buy rating (from Hold) and raised their price target on the company to $80.00 (from $65.00) ahead of the lawn care company’s 2Q23 earnings release. Stifel now estimates DMG will report 2Q EPS of $3.83, up from $3.58, driven by a stronger estimated margin performance. Scotts Miracle-Gro is scheduled to report earnings on Wednesday May 3rd before the opening bell.
Analysts wrote in a note, “The shares been volatile with significant focus recently on adverse March weather implications. While a headwind, we believe the outsized attention is misplaced with April weather of greater consequence and favorable. More importantly, we believe the recent leverage update implied a stronger margin profile providing added flexibility to achieve FY23 profit guidance. With the company executing against a more normal environment and F2Q23 results likely to showcase a stronger margin profile, we believe the focus will shift to our robust FY24 EPS growth outlook (+29% y/y) with enthusiasm building for the company’s advantaged long-term growth prospects.”
Stifel now estimates FY24 EPS of $4.10 (+29% y/y), down from $4.58. They reduced estimates to consider a breakeven Hawthorne performance ($0.49 headwind to EPS from prior estimate) and Stifel’s margin outlook now only considers the $185 million of cost savings-in hand with no benefits from favorable input costs.
Shares of SMG are up 3.37% in afternoon trading on Monday.