Archer Daniels Midland stock target raised to $58 by Stifel

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On Tuesday, Stifel, a financial services firm, updated its stock price target for Archer Daniels Midland Company (NYSE:), a global food processing and commodities trading corporation, increasing it to $58.00 from the previous $56.00. The firm has decided to maintain a Hold rating on the stock.

The adjustment comes after Archer Daniels Midland reported its financial results for the fourth quarter of 2023. The firm’s analysts have revised their estimates for ADM for the year 2024, taking into account the challenges the company faces, such as margin pressures in its crushing and ethanol operations.

The revisions are mainly due to an uptick in corporate expenses and a reassessment of the Nutrition segment’s estimates following the fourth-quarter performance and pending clarification on accounting issues within that business.

Despite the lowered expectations for 2024, Stifel has slightly increased the target price. This change is attributed to an adjustment in the earnings multiple from 9 times the estimated 2024 earnings per share to 10 times the average estimated earnings for 2024 and 2025. The rationale behind the moderate de-risking is based on stabilized expectations set by the company’s full-year guidance.

The analyst’s commentary suggests a cautious stance, with the expectation that ADM shares will continue to trade within the post-ethanol/commodity cycle range of approximately 8 to 12 times earnings until there is greater confidence in the Nutrition segment’s potential and the possibility of improved margins in the Crush business. The new price target reflects these considerations and the current outlook for the company.

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