SMPL Stock Forecast & Price Target

Simply Good Foods is a leading consumer packaged food and beverage company with strong brands, Quest and Atkins, which target consumers looking for protein-rich and low carbohydrate options. The company's recent third quarter performance showed strong momentum in chips and shakes, but challenges in bars. While the company's turnaround efforts are at an early stage, a modest EV/EBITDA of 7x CY26 estimate is appropriate given the lack of visibility on a sustainable sales improvement. Near-term priorities include strengthening business model economics, strategic focus, and rebuilding brand investment with high returns. Overall, a Buy rating is maintained with a target price of $20.

Simply Good Foods is facing significant challenges and their performance has declined over the last two years. Some of the major issues contributing to their decline are a lack of consistent messaging and marketing, decreased distribution, and a shift away from their core identity. The company has lowered its guidance for the year, with revenue expected to decrease by 10-7% and EBITDA by 22-19%, and their plans for a high-single-digit price increase in September may not be enough to offset inflationary headwinds. Simply's recent appointment of a new CEO may bring some changes, but the company is still far from achieving its long-term goals of gross margins of 40%, sustained marketing at 10% of sales, and EBITDA margins of 20%. With these challenges in mind, a negative outlook on the company's stock may be justified.