Jefferies has moved Simply Good Foods Co (NASDAQ:SMPL) from a Hold rating to Buy, saying the market has overly discounted the company's shares despite mixed trends within its nutrition-focused product lineup. The firm attached a $22 price target to the stock and noted that shares currently trade at roughly five times forward EBITDA, a multiple that has fallen notably over the past year and, in Jefferies' view, understates the durability of Simply Good Foods' key brands.
Demand and recent growth
The brokerage highlighted a longer-term shift in consumer preferences toward protein-dense and on-the-go foods as a structural tailwind for Simply Good Foods. Over the last four years the company has delivered revenue growth that compounds at about 10% annually, reflecting that change in demand. Jefferies singled out the Quest nutrition bar and protein snack franchise as the principal growth engine, estimating that Quest has expanded at an approximately 17% compound annual rate.
Brand-level performance
Growth has not been uniform across the company's brands. Atkins, the weight-management label, has experienced declining sales as some consumers pivot to alternative fitness and performance products. OWYN, a plant-based protein shake acquired more recently, has seen its momentum slow after product quality issues that affected consumer perception. Jefferies noted that OWYN represents roughly 10% of fiscal 2025 sales.
Margin and cost pressures
The brokerage also pointed to external pressures that could eat into profitability. Increased competition in the category and higher input costs for ingredients such as cocoa and whey may pressure margins and could necessitate heavier marketing investment to defend share. Jefferies expects these headwinds to contribute to slower top- and bottom-line expansion in the years ahead.
Forward outlook and valuation analysis
Projecting forward, Jefferies forecasts revenue growth of about 2% annually from fiscal 2026 through fiscal 2028, with profit growth of roughly 1% over the same interval. The firm said those conservative forecasts are already reflected in the stock's depressed valuation. Using a sum-of-the-parts approach that excludes Atkins because of weak category trends, Jefferies' analysis suggests the equity value tied to Quest and OWYN could approach $2 billion.
Investment case
Jefferies argued the steep decline in the share price over the last year leaves room for upside even under modest growth assumptions, supporting the move to a Buy rating. The upgrade rests on the premise that the market has priced in the company’s near-term challenges to an extent that may be disproportionate to the long-term fundamentals of its core brands.
Note: This report summarizes Jefferies' published view on Simply Good Foods and reflects the firm’s estimates and analyses as described above.