What Happened?
Shares of packaged food company Simply Good Foods (NASDAQ: SMPL) jumped 3% in the morning session after an analyst at Mizuho maintained an 'Outperform' rating on the stock and a significant stock purchase by the company's CFO was disclosed.
The analyst did lower the price target on the shares to $35.00 from $43.00. However, the new target still suggested a substantial potential upside from the stock's trading price. This analyst action was paired with a show of confidence from company leadership. The firm's Chief Financial Officer, Christopher Bealer, acquired 9,946 shares for a total value of about $199,000. The purchase increased the CFO's direct ownership in the company by over 43%. The stock also may have benefited from broader market trends, as the consumer staples sector posted gains.
After the initial pop the shares cooled down to $19.58, up 2.9% from previous close.
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What Is The Market Telling Us
Simply Good Foods’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock gained 3.1% on the news that the stock rebounded as it hit a 52-week low in the prior session. The bounce follows a challenging period for the packaged food company, known for its Atkins brand, which saw its stock touch a new 52-week low of $27.00. The recent downward pressure has been accompanied by a bearish outlook questioning the company's fundamentals. An analysis pointed to concerns including its relatively small-scale operations, estimated sales growth slowing to 1.4% for the next twelve months, and a decrease in its free cash flow margin. Despite the gain, the stock has declined significantly over the past year.
Simply Good Foods is down 49.8% since the beginning of the year, and at $19.58 per share, it is trading 51.1% below its 52-week high of $40.01 from November 2024. Investors who bought $1,000 worth of Simply Good Foods’s shares 5 years ago would now be looking at an investment worth $830.41.
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