1、 EQUITIES FOOD&HPC THETHE J.J.M.M.SMUCKERSMUCKER COMPANYCOMPANY OUTPERFORM PRICE*USD103.5 TARGET PRICE USD120(UPSIDE 16%)TARGET PRICE EPS 04/26e EPS 04/27e 26%2%2%Coffee Stimulating Upside to Estimates 9 JULY 2025 Securities Research Report Production time:11:30(London time)Research Analysts&Publish

2、ing EntitiesResearch Analysts&Publishing Entities Earnings upside has been tough to find in the packaged food group as of late.That said,we believe that better than expected performance in coffee appears to be stimulating upside to estimates for SJM.Therefore,we are raising our TP from$95 to$120 and

3、 double upgrading to Outperform.We see meaningful upside to F1Q26 estimates due to favorable coffee price elasticities Recall that,on its F4Q25 conference call,SJM observed that it expected price elasticities for its U.S.Retail Coffee segment to worsen to-0.5x in FY26 and to be even greater in F1Q26

4、,given the anticipated consumer response to the companys May price increase.Admittedly,this forecast immediately struck the market as conservative,given price elasticities had been running quite benign,and tracked channel trends now corroborate this belief.Specifically,through 8 weeks of the quarter

5、,SJMs coffee volumes are flat YOY while pricing is up+16%YOY.As a result,we are raising our F1Q26 forecast for both organic sales and operating profit in the segment.Scanner data suggests there could also be upside to F1Q26 from Sweet Baked Snacks Since the November 2023 acquisition of Hostess,the b

6、usiness has only had surprises to the downside.And there have been several.That said,quarter to date scanner trends suggest a more modest sales decline in F1Q26 than the company had planned for as of its F1Q26 results.Net,we are raising our F1Q26 forecast for both organic sales and operating profit