LW: Recovering Volume In North America Will Drive Renewed Uptrend

Analysts have raised their price targets for Lamb Weston Holdings, with the consensus moving up by $2 to $63 per share. They cite stronger-than-expected North American volume growth and improving gross margins as key drivers of renewed confidence in the company's recovery.

Analyst Commentary

Recent street research highlights a balanced outlook on Lamb Weston Holdings, reflecting both renewed optimism and ongoing caution from industry analysts.

Bullish Takeaways

• Bullish analysts note that Lamb Weston started FY26 with sequentially stronger volume growth in North America. This surpassed expectations and supported a higher valuation.
• Improved gross margins, which came in above earlier estimates, are bolstering confidence in the company's ability to execute on its recovery strategy.
• The return of price and mix contribution to growth in North America is viewed as a critical catalyst for sustained improvement in the company's financial performance.
• Recent new business wins and the decision to restart a previously curtailed production line are seen as indicators that Lamb Weston is successfully regaining commercial momentum.

Bearish Takeaways

• Bears remain wary about ongoing price and mix headwinds. These factors have led management to maintain a cautious full-year outlook despite recent positive indicators.
• Analysts caution that the full restoration of historical volume and margin levels still faces significant hurdles and could take time to achieve.
• While volume and EBITDA outpaced internal expectations in Q1, skeptics note that future growth is vulnerable to shifting consumer trends and potential market disruptions.

What's in the News

• Lamb Weston Holdings announced the opening of a 40,000-square-meter production facility in Mar del Plata, Argentina. The facility is designed to serve the growing Latin America market with premium frozen potato products. The project is expected to create 250 direct jobs and up to 3,000 indirect jobs. (Key Developments)
• The newly operational Mar del Plata facility can process 200 million pounds of potatoes per year and export approximately 80% of its product to Brazil and other Latin American markets. (Key Developments)
• Between May and August 2025, Lamb Weston repurchased 187,259 shares for $10.26 million. This brings the total under its ongoing buyback program to over 11.4 million shares and $777.56 million since its inception in December 2018. (Key Developments)
• The company reaffirmed its earnings guidance for fiscal year 2026. It maintained a net sales target in the range of $6.35 billion to $6.55 billion, while factoring in current tariffs but not future trade policy changes. (Key Developments)

Valuation Changes

• Fair Value remains unchanged at $66 per share. This reflects analyst consensus on intrinsic value stability.
• Discount Rate has edged down marginally from 6.96% to 6.96%. This indicates a slightly lower perceived risk profile.
• Revenue Growth projections are essentially flat, holding at 1.77% per year.
• Net Profit Margin expectations are stable, with the latest estimate at 8.68%.
• Future P/E ratio is steady at approximately 17.64x, suggesting minimal adjustments in market valuation assumptions.