What Happened?
Shares of nutrition products company Bellring Brands (NYSE: BRBR) jumped 4.8% in the afternoon session after Stephens upgraded the stock to 'overweight' from 'equal weight', viewing the recent post-earnings plunge as a buying opportunity. The upgrade followed a steep 33% drop in the stock earlier in the week. That decline occurred even after the company reported fiscal third-quarter results that surpassed Wall Street expectations. BellRing posted an adjusted earnings per share of $0.55 on revenue of $547.5 million, beating forecasts. Stephens set a $50 price target on the shares. Other analysts also weighed in, with Barclays maintaining an 'overweight' rating but lowering its price target to $50, reflecting some caution despite the positive outlook.
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What Is The Market Telling Us
BellRing Brands’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 33.3% on the news that the company reported disappointing third-quarter financial results and narrowed its fiscal year 2025 outlook. The sell-off appeared driven by concerns over retailer inventory levels. In May, BellRing first revealed that several key retailers decided to lower their on-hand supply of its nutritional products. This action created a significant headwind for third-quarter growth. Regardless, the quarter itself was fine as BRBR beat across the board (organic revenue growth, total revenue, and EBITDA). However, margins narrowed and EBITDA guidance for the full year fell below expectations. The stock's reaction suggests the market was expecting more given the underwhelming outlook.
BellRing Brands is down 47.5% since the beginning of the year, and at $39.19 per share, it is trading 50.6% below its 52-week high of $79.39 from January 2025. Investors who bought $1,000 worth of BellRing Brands’s shares 5 years ago would now be looking at an investment worth $1,980.
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