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Why Most Analysts Are Neutral on McCormick

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Dec. 4 2020, Updated 10:53 a.m. ET

Ratings summary and target price

As you can see in the graph below, McCormick (MKC) stock is covered by 14 Wall Street analysts. They’ve rated the company a 2.8 on a scale of 1.0 (“strong buy”) to 5.0 (“strong sell”). About 21.0% of the analysts have recommended a “buy” for the stock, and 71.0% have recommended a “hold.” Only one analyst has recommended a “sell.”

On April 6, 2017, McCormick was trading at $100.08 per share, which is about 1.0% above analysts’ 12-month price target of $99.08.

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Initiatives and headwinds

McCormick’s growth initiatives, including new product launches, digital marketing, expanded distribution through e-commerce, and acquisitions, are likely to drive its top-line growth and expand its margins over the long term. However, an adverse currency movement and a rise in material costs will remain a drag on the company’s financials.

You can get indirect exposure to McCormick through the PowerShares S&P 500 Low Volatility ETF (SPLV), which invests 1.0% of its portfolio in the company.

Recent analyst activity

On April 4, 2017, JPMorgan upgraded McCormick (MKC) stock from “underweight” to “neutral.” On February 15, 2017, Deutsche Bank initiated coverage of the stock with a “hold” rating.

Peer comparison

Of the 19 analysts covering General Mills (GIS), 11.0% have recommended a “buy” for the stock. About 68.0% of them have recommended a “hold,” and 21.0% have rated it a “sell.”

Of the 14 analysts covering ConAgra Brands (CAG), 64.0% have rated the stock a “buy,” 29.0% have rated it a “hold,” and 7.0% have rated it a “sell.”

Of the 15 analysts covering Kellogg (K), 11.0% have rated the stock a “buy,” 74.0% have rated it a “hold,” and 16.0% have rated it a “sell.”

In the next and final part of this series, we’ll take a look at McCormick’s valuation.

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