Jefferies raised its price target on Scotts Miracle-Gro (SMG) to $74 from $71, maintaining a Buy rating, despite the stock's -15.21% YTD return and recent flat performance. The firm projects strong gross margin gains in fiscal 2026 and accelerating U.S. Consumer growth in fiscal 2027, driven by increased advertising, even as retailer ordering patterns contribute to a slower first half of 2026. This positive outlook follows SMG's mixed Q4 2025 results, where EPS slightly beat but revenue missed, with the company highlighting strategic initiatives and product innovation for future growth.
Jefferies raised its price target on Scotts Miracle-Gro (SMG) to $74 from $71, maintaining a Buy rating, aligning with InvestingPro's assessment of SMG as undervalued at $55.76. Despite this, the stock remained flat post-announcement and has experienced a challenging year with a -15.21% YTD return, trading 40% below its 52-week high of $93.90. Near-term, SMG faces a slower first half of fiscal 2026 due to retailers ordering closer to their point-of-sale curve. The company's strategic de-emphasis of commodity categories, while potentially scrutinized, is expected by Jefferies to yield favorable returns through marketing reallocation. InvestingPro rates SMG's financial health as "GOOD" (2.8), supporting these strategic decisions. Jefferies anticipates strong gross margin gains in fiscal 2026, though SG&A leverage may be limited by low-single-digit U.S. Consumer growth. Increased advertising spending is projected to support accelerating U.S. Consumer growth in fiscal 2027, with the firm viewing increased advertising without volume growth as unlikely. Q4 2025 results were mixed, with EPS slightly exceeding expectations but revenue missing projections, yet the company highlights strategic initiatives for future growth.
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