Lamb Weston (LW) Stock Trades Down, Here Is Why

What Happened?

Shares of potato products company Lamb Weston (NYSE:LW) fell 2.6% in the afternoon session after analysts continued to express concerns about the company's outlook, with several firms cutting their price targets. 

This move extended declines from the previous trading session, which was prompted by a rating downgrade. On the day of the move, Barclays lowered its price target on the stock to $55 from $68, while Bernstein also cut its target to $46 from $65. These actions followed a downgrade from BNP Paribas Exane during the prior session, which lowered its rating to 'Neutral' from 'Outperform' because of what it saw as 'intensifying international competition.' 

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lamb Weston? Access our full analysis report here.

What Is The Market Telling Us

Lamb Weston’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 1 day ago when the stock dropped 2.1% on the news that BNP Paribas Exane downgraded the stock to 'Neutral' from 'Outperform', citing concerns over intensifying competition. 

The firm also significantly lowered its price target on the shares. This move followed a similar action from B of A Securities, which also cut its price target while maintaining a 'Neutral' rating. The analyst actions came on the heels of the food processing company's recent second-quarter earnings report. While the results beat Wall Street's expectations, management's full-year guidance unsettled investors. The company projected that revenue would be flat year-over-year, and that a key earnings metric would fall by 11%. This outlook suggested that Lamb Weston was sacrificing profitability to maintain market share in a highly competitive environment.

Lamb Weston is down 37% since the beginning of the year, and at $41.58 per share, it is trading 37.9% below its 52-week high of $67 from December 2024. Investors who bought $1,000 worth of Lamb Weston’s shares 5 years ago would now be looking at an investment worth $528.98.

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