Simply Good Foods Stock Rises On Morgan Stanley’s ‘Equal Weight’ Stance: Retail Stays Cautious

The firm took a positive view of companies with "advantaged categories, demonstrated pricing power” and thriving brands

Shares of Simply Good Foods (SMPL) rose 1% on Monday as the company received an ‘equal weight’ rating from Morgan Stanley, but retail watchers turned cautious.

According to Morgan Stanley analyst Megan Alexander Clapp, who also launched coverage of the U.S. packaged food industry with an in-line view, the packaged foods company’s earnings visibility remains low, and sales growth may "remain muted" with consumption headwinds and constrained pricing power, The Fly reported.

Additionally, accelerating commodity inflation and ongoing need for reinvestment limits margin expansion potential, said the report.

The firm took a positive view of companies with "advantaged categories, demonstrated pricing power, and thriving brands"  but warned about the potentially slower growth and higher reinvestment risks.

Among large-caps companies, Morgan Stanley gave an ‘Overweight’ rating for Mondelez (MDLZ), citing its "superior" long-term growth algorithm.

Sentiment on Stocktwits was ‘neutral’ on Monday compared to ‘bullish’ a day ago. Message volume was extremely low.

Simply Good Foods will report second-quarter earnings in April. Wall Street analysts expect the company to post earnings per share of $0.40 on revenue of $354.52 million.

In January, Simply Good Foods reaffirmed its fiscal year 2025 outlook based on solid retail takeaway, visibility into second quarter orders and strong Adjusted EBITDA growth.

It has said it expects organic sales growth to be driven primarily by volume and strong advertising and marketing plans.

The company did not make any changes to its expectation of gross margin outlook and highlighted productivity and cost savings initiatives for the rest of the year.

Simply Good Foods’ stock is down 14% year-to-date.

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