Stephens Cuts Hormel (HRL) PT to $25, Sees Near-Term Margin Pressure Despite 2026 Improvement

Hormel Foods Corporation (NYSE:HRL) is included among the 13 Cheapest Dividend Aristocrats to Invest in.

On February 11, Stephens trimmed its price recommendation on Hormel Foods Corporation (NYSE:HRL) to $25 from $27. It maintained an Equal Weight rating on the stock. The firm pointed to near-term pressure in Q1, mainly tied to the timing gap between pricing moves and changes in input costs. While management expects earnings to improve meaningfully this year, margins remain under strain. Gross profit margin came in at 15.7%, reflecting that pressure. Even so, three analysts have recently raised their earnings estimates for the upcoming period.

Stephens said Hormel is guiding for earnings to improve as 2026 unfolds. USDA data suggests higher hog slaughter levels and heavier weights in the spring and summer months, trends that could ease some input cost pressure and support profitability. The firm also flagged the risk tied to highly pathogenic avian influenza and its potential impact on Hormel’s turkey operations. Tighter supply could lift pricing. That benefit, though, may be tempered by the company’s cost-plus contracts, which limit how much margin expansion it can capture.

Despite the current challenges, Hormel’s scale remains a key advantage. Its products are staples in supermarkets and convenience stores, giving it steady volume. In the third quarter, net sales exceeded $3 billion. GAAP net income was close to $184 million. Both figures increased year over year, although profit fell short of Wall Street expectations.

Hormel Foods Corporation (NYSE:HRL) operates as a global branded food company, developing and distributing products across retail, foodservice, and international markets.

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