Bernstein Cuts Lamb Weston Target as Profit Outlook Raises 2027 Concerns

Core Viewpoint - Bernstein SocGen Group has lowered its price target on Lamb Weston to $46 from $65 while maintaining a Market Perform rating, resulting in a more than 1% decline in shares on Monday [1] Group 1: Financial Performance - Lamb Weston's fiscal second-quarter 2026 results exceeded expectations, but full-year FY26 guidance indicates a significant decline in profitability during the second half [2] - At the midpoint of guidance, Bernstein estimates a 0.7% decline in second-half sales, aligning with current trends [2] - EBITDA guidance suggests a 21.2% decline in second-half EBITDA, which is approximately 14% below consensus expectations, raising concerns about earnings sustainability heading into fiscal 2027 [3] Group 2: Customer Retention and Profitability - Bernstein acknowledged Lamb Weston's success in retaining and adding large international customers but questioned the profitability of these wins [4] - Given the uncertainty around margins and future earnings power, Bernstein prefers to remain on the sidelines [4]