McCormick No Longer A Sell At Citi After 1.5 Years

It took one and half years for Citi analyst David Driscoll to upgrade shares of McCormick & Company, Incorporated (NYSE: MKC) to Neutral from Sell. While believing further expansion of the multiple would be difficult, the brokerage boosted its price objective by $17 to up to $102.

In the last few years, Driscoll pointed out that the company faced enough amounts of headwinds as far as its earnings per share are concerned and that the worm seems to be turning now. The change of opinion came after the McCormick suffered more than 3.3 percentage points of cumulative dollar share losses during the period between the years 2013 and 2015.

The brokerage pointed out that the company's share price was up by more than 10 basis points in the trailing three-month period. Secondly, the company's spice retail sales in the Americas have sped up by 2.5 percentage points after the first quarter of the current year ended.

The third factor was net commodity inflation turned into a net deflation in the current fiscal year. The analyst indicated this is why it made him boost the price target.

Driscoll concluded, "However, with shares trading at 25x on F17 EPS, we believe further multiple expansion will be difficult to come by, with earnings becoming the principal driver of the stock going forward."