WEST Stock Forecast & Price Target

Westrock Coffee Co has demonstrated solid financial growth, with 4Q24 sales rising by 6.5% to $229 million, and the company anticipates a total sales increase of 9% to $914 million for the fiscal year. The Sustainable Sourcing & Traceability segment showed a notable sales increase of 38% to $55 million, reflecting robust demand and effective management strategies. Additionally, Westrock's management forecasts a significant annual growth of approximately 50% in adjusted EBITDA over the next two years, supported by increased revenues from new retail customers and operational efficiencies.

Westrock Coffee Co is facing significant profitability challenges, with an anticipated adjusted EBITDA margin compression to 5.5%, a decrease from 7.3%, and a gross margin contraction to 17%, down from 18.2%. Furthermore, the company is projected to experience a total sales growth of only approximately 1.0% to $216 million for 4Q24, primarily driven by a 6.5% decline in the Beverage Solutions segment due to unfavorable consumer spending trends and softness in the ground coffee and k-cup markets. Additionally, the outlook for 2025 adjusted EBITDA guidance falls short of prior forecasts, reflecting demand softness resulting from higher coffee prices and concerns over the timing and execution associated with the new Conway, AR facility.