DA Davidson has left its recommendation on Marzetti Company (NASDAQ: MZTI) unchanged, reiterating a Neutral rating and a $184.00 price target following the company’s fiscal second-quarter release. The firm’s target sits toward the lower portion of an analyst range that spans from $180 to $232, based on InvestingPro data.
In its review, DA Davidson highlighted that the Retail segment produced sales below expectations in the quarter. Management linked that weakness to impacts stemming from the government shutdown. By contrast, the firm noted that Marzetti’s other operating segments generally reported results in line with analyst projections.
Marzetti disclosed the acquisition of Bachan’s, a Japanese barbecue sauce brand. DA Davidson characterized the deal as a move that brings Marzetti closer to its long-standing core focus on sauces, dressings, and dips. The company’s balance sheet was also a point of emphasis - InvestingPro data indicate Marzetti holds more cash than debt, a position DA Davidson said supports the company’s ability to make strategic transactions.
The research house also acknowledged investor skepticism may be a factor given Marzetti’s uneven history with mergers and acquisitions over time. Nevertheless, DA Davidson suggested that because Bachan’s aligns directly with Marzetti’s core product categories, the acquisition may carry less execution risk than deals outside the company’s traditional scope.
DA Davidson maintained its Neutral rating on the stock but noted that any meaningful pullbacks in the share price would be viewed more favorably by the firm. At the time referenced in the research, Marzetti shares were trading at $160.54 and were close to a 52-week low of $152.94. The analyst firm also cited InvestingPro Fair Value estimates indicating the stock appears slightly undervalued.
From a shareholder-return perspective, Marzetti has a long record of returning capital via dividends: the company has paid dividends for 55 consecutive years and has raised its payout for the past nine years, according to the data DA Davidson referenced.
On the earnings front, Marzetti’s second-quarter results for fiscal year 2025 fell a bit short of consensus. Reported earnings per share were $2.15, below the $2.21 analysts had expected. Revenue came in at $518 million, slightly under the $519.9 million forecast. DA Davidson’s commentary incorporated these misses while assessing near-term fundamentals and the company’s strategic choices.
Overall, DA Davidson’s stance blends caution on valuation and past M&A execution with recognition of Marzetti’s solid liquidity and the strategic fit of the Bachan’s acquisition. The firm’s Neutral rating reflects that combination, and it signaled openness to a more constructive view should the stock decline from current levels.
What this means for markets and sectors
- Food manufacturing and packaged consumer goods: Marzetti’s results and acquisition activity bear directly on investor assessments in these sectors.
- Equity markets: DA Davidson’s stance and the company’s near-term earnings miss are relevant for analysts and investors tracking specialty food stocks and dividend-paying consumer staples names.