Citi lowers McCormick stock price target on tariff concerns

Citi lowered its price target on McCormick & Company to $77 from $80, maintaining a Neutral rating, citing potential tariff-related risks to the FY25 outlook and downward earnings revisions from analysts; this aligns with a recent share price decline of 6.93% over six months. The firm anticipates McCormick's Q2 results will show Consumer segment strength offset by weakness in Flavor Solutions, compounded by a higher tax rate. This outlook contrasts with Bernstein's Outperform rating based on potential reformulation trends, while Argus downgraded MKC due to rising input costs and weakened restaurant traffic.

Analysis

McCormick & Company (MKC) faces heightened scrutiny as Citigroup lowered its price target to $77.00 from $80.00, maintaining a Neutral rating, primarily due to potential tariff-related risks anticipated to impact the fiscal year 2025 outlook and potentially depress earnings estimates. This cautious stance is supported by InvestingPro data indicating four recent downward earnings revisions from analysts and a 6.93% decline in MKC's share price over the past six months, suggesting these concerns are partially priced in. Ahead of its fiscal second-quarter 2025 earnings report on June 26, Citi projects McCormick's organic sales growth and earnings per share to be slightly below consensus estimates tracked by Visible Alpha, with anticipated strength in the Consumer segment likely counterbalanced by weakness in its Flavor Solutions division and a higher expected tax rate. The broader analyst landscape presents a mixed view: UBS initiated coverage with a Neutral rating and an $83 price target, citing low-single-digit volume growth and tariff headwinds; Bernstein remains more optimistic with an Outperform rating and a $101 target, banking on a U.S. packaged foods reformulation trend; and Argus downgraded MKC to Hold due to rising input costs and diminished restaurant foot traffic impacting the Flavor Solutions segment. Internal developments include the planned retirement of Chief Growth Officer Kasey Jenkins in early 2026 and routine shareholder approvals on executive compensation and auditor appointments, all occurring amidst ongoing challenges from global trade tensions and supply chain pressures affecting the food manufacturing sector.

Key Decisions for Investors

• Investors should closely monitor McCormick's Q2 2025 earnings report on June 26 for critical updates on tariff impacts, input cost inflation, segment-specific performance, particularly the Flavor Solutions division, and any revisions to full-year guidance.
• Given the prevailing cautious sentiment highlighted by Citi's price target reduction and Neutral rating, alongside similar views from UBS and Argus, a prudent approach involves assessing the company's strategies to mitigate margin pressures from tariffs and costs before considering new or expanded positions.
• Evaluate the divergent analyst price targets, ranging from $77 to $101, by tracking leading indicators such as developments in the U.S. packaged foods reformulation trend (Bernstein's bull case) and trends in restaurant foot traffic (Argus's concern for Flavor Solutions).