Stephens has lowered its 12-month price target for Hormel Foods (HRL) to $25.00 from $27.00 and retained an Equal Weight recommendation on the stock. The revised target sits close to Hormel's recent trading price of $24.30, and external fair-value assessments suggest the shares may be cheaper than current market levels.
The research house pointed to an expected continuation of headwinds in the first quarter, driven largely by lagged effects between the company's pricing actions and movements in input costs. Stephens noted that those timing differences could keep pressure on results in the near term, even as management has signaled an expectation for a meaningful improvement in earnings this year.
That caution from Stephens is set against several other data points in Hormel's public commentary and analyst activity. The company reported relatively weak gross profit margins of 15.7%, and measures of analyst sentiment show three brokers have lifted their earnings estimates for the upcoming period.
Looking toward the rest of 2026, Stephens highlighted the company's expectation for sequential earnings gains. The firm referenced USDA data indicating increased hog slaughter numbers and heavier hog weights into spring and summer, which should help moderate the input cost side for the business as the year progresses.
Stephens also discussed potential volatility stemming from highly pathogenic avian influenza (HPAI) affecting Hormel's turkey flock. While HPAI could create upside pressure on turkey pricing, the research note acknowledged that the company's exposure to cost-plus contract arrangements may limit the benefit of higher market prices for certain parts of Hormel's business.
On valuation, Stephens observed that Hormel's shares trade at multi-year lows, but the firm said it would become more constructive as company results provide clarity or as the normalization of input costs and any material upside in turkey pricing become better understood.
Despite the near-term operational uncertainties, Hormel retains characteristics that some investors find attractive: a 4.8% dividend yield and a track record of 33 consecutive years of dividend increases.
Other corporate developments and broker commentary were outlined alongside the Stephens note. Hormel completed a transaction with Forward Consumer Partners that carved Justin's into a standalone company while Hormel retained a 49% ownership stake. On the leadership front, Domenic Borrelli was appointed executive vice president of Retail and Jason Levine was named Hormel's first enterprise-wide chief marketing officer. Additionally, two longtime executives, Mark Morey and Paul Peil, announced their retirements.
On the brokerage side, Piper Sandler raised its price target for Hormel to $26 while keeping a Neutral rating. Piper Sandler's adjustment followed Hormel's pre-announcement highlighting fourth-quarter fiscal 2025 cost and margin pressures, which the broker said offered useful clarity before the formal quarterly results. Piper Sandler also noted that Hormel's fiscal 2026 guidance appears consistent with its longer-term growth strategy.
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