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DA Davidson analyst Brian Holland upgraded Utz Brands (NYSE:UTZ) from Neutral to Buy on Thursday, maintaining the price forecast of $16.
The analyst sees a compelling “risk-reward” setup for Utz Brands despite broader challenges in the food sector.
Holland highlights several supportive factors, including a firming position in the salty snacks category, which benefits from reduced promotional pressure and Utz Brands’ strong performance in non-tracked retail channels.
Additionally, the company has exceeded expectations in transforming its supply chain, potentially setting the stage for upward earnings revisions if its recent market share gains continue.
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The analyst also notes that, aside from names like Freshpet, Inc (NASDAQ:FRPT) and SunOpta, Inc. (NASDAQ:STKL), no other food stock is currently trading at “a wider relative valuation gap.”
The company released 1Q25 preliminary results released last week.
Although overall sales in the salty snack category have remained weak due to inflation-driven volume pressure, growing health consciousness, and possible impacts from GLP-1 usage, the analyst notes that Utz Brands has steadily gained market share.
This modest but consistent share growth has been driven by expanded distribution, increased marketing efforts, and product innovation targeting largely untapped markets—particularly in regions that account for over 60% of salty snack sales.
While competitive promotions, especially from dominant players like Frito-Lay, created challenges through 2024, the lack of sustained volume gains from those promos led to a market reset, the analyst writes.
Price Action: Utz shares are trading higher by 1.61% to $13.60 at last check Thursday.
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