TD Cowen has revised its price target for McCormick & Company (NYSE:MKC) downward to $75 from the previous $82, while continuing to endorse the stock with a Buy rating. This adjustment follows the company's fourth-quarter earnings per share (EPS) results, which missed analyst expectations, alongside fiscal year 2026 guidance that came in below consensus forecasts.
According to TD Cowen analyst Robert Moskow, McCormick’s earnings setback is largely attributed to rising input costs and an unexpected surge in enterprise resource planning (ERP) expenditures. These factors have exerted pressure on the company’s financial outlook. Recent data from InvestingPro indicates that three analysts have lowered their earnings estimates for McCormick for the upcoming period, reflecting broader concerns about near-term performance.
Trade valuation metrics reveal that McCormick currently trades at a price-to-earnings (P/E) ratio of 22.7, which appears elevated when set against the company’s near-term earnings growth potential. Part of the caution stems from McCormick’s guidance projecting 1-3% organic revenue growth in fiscal 2026, a forecast that does not show notable improvement from the 2% growth estimated for fiscal 2025. This tepid growth outlook contrasts with the company’s revenue increase of just 1.7% over the previous twelve months.
Nevertheless, TD Cowen regards the recent decline in McCormick’s stock price as possibly overextended. The firm points to McCormick's distinctive volume growth relative to peers and predicts that fiscal year 2027 may bring some relief in costs, factors which support maintaining the Buy rating. In addition, McCormick’s commitment to shareholder returns remains robust, having sustained 55 consecutive years of dividend payments and currently offering a dividend yield of 3.1%. An InvestingPro Fair Value assessment suggests that the share price is slightly undervalued at present levels.
Regarding recent financial performance, McCormick reported an EPS of $0.86 for the fourth quarter of 2025, marginally below the anticipated $0.87. However, the company surpassed revenue expectations with $1.85 billion compared to the forecasted $1.84 billion. Although revenue results beat projections, the slight EPS miss appeared to impact investor sentiment. This close alignment of actual results with analyst forecasts highlights how even minor deviations can affect market perception and underscores the importance of meeting both revenue and earnings expectations to maintain confidence.
Overall, the developments signal a period of cautious optimism as McCormick contends with elevated costs and modest growth projections. Investors remain attentive to the company's ability to manage expenses and deliver improved financial results in the coming years.