TreeHouse Foods (THS) Stock Forecast & Price Target

TreeHouse Foods has demonstrated a notable ability to gain private label market share, with a 65 basis point increase in volume share across measured channels, reflecting the company's successful performance against both its categories and other private label competitors. In addition, TreeHouse reported a 1% growth in case volume within its retail business for the quarter, supported by a strong pipeline of new business opportunities, which are up 20%, reinforcing the company's strategic focus on high-growth categories and driving an expected mid-single digit organic sales growth in the latter half of the year. Furthermore, the company's efforts to improve margins are evident, with projected gross margin expansion of 10 basis points year-over-year and 120 basis points sequentially to 18.5%, fueled by supply chain improvements and new business initiatives, contributing to an overall positive outlook for TreeHouse Foods.

TreeHouse Foods has encountered significant challenges, as reflected by a 7.8% decline in its shares alongside a weaker performance in the second quarter, driven by lower-than-expected revenue and EBITDA guidance. The company's gross margin is expected to decline by 110 basis points in the second quarter of 2024, reaching only 15.5%, due to volume deleverage from the broth business, increased costs from plant disruptions, and lagging cocoa pricing. Furthermore, the company has adjusted its 2023 revenue guidance downward in light of a weaker base business and the divestiture of its snack bars division, complicating its recovery prospects amid anticipated continued operating cost pressures.