Jefferies Buys Simply Good Foods with $22 Target; Quest Sales Exceed 85% of Revenue
Jefferies upgraded The Simply Good Foods to Buy with a $22 price target, saying Quest accounts for over 85% of its sales in protein bars, shakes and snacks. Analysts project a 7% CAGR for Quest through fiscal 2028, note 12% performance segment growth versus a 15% drop in Weight Management.
1. Analyst Upgrade and Valuation Gap
Jefferies upgraded to Buy with a $22 price target, asserting that The Simply Good Foods Company’s current valuation understates the strength of its Quest brand and broader protein-focused portfolio.
2. Quest Brand Growth and Forecast
Quest generates over 85% of company sales in bars, shakes and snacks; analysts project a 7% compound annual growth rate from fiscal 2026 through 2028, driven by consistent category leadership and expansion into salty snacks.
3. Segment Performance Divergence
The Performance and Salty Snacks segment grew approximately 12% over the past year, while Weight Management declined near 15%, reflecting varied consumer demand across product lines.
4. Cost Pressures and Margin Recovery
Rising input costs for whey and cocoa and increased promotional activity are expected to pressure near-term margins, but analysts forecast a return to fiscal 2025 margin levels within two years.