Zacks Investment Research downgraded shares of McCormick & Co (MKC) from OUTPERFORM to NEUTRAL on February 26, 2015, with a target price of $79.00.
We are reverting back to a Neutral recommendation on McCormick from Outperform as the company reported mixed fourth-quarter fiscal 2014 results. While earnings of $1.16 per share beat the Zacks Consensus Estimate, it declined 3% year over year, due to softer revenues lower operating profits. On the other hand, revenues of $1.17 billion lagged the consensus mark and were almost flat year over year. While the consumer business did well in the quarter, sales from the industrial business were slightly lower than the prior year, mainly due to softness in the Asia-Pacific region. Despite cost savings and gross margin expansion, adjusted operating income declined due to unfavorable mix and increased brand investments. Nevertheless, McCormick is optimistic on its consumer business over the long term as it expects growing demand for flavors in the coming years. It has also provided a favorable outlook for fiscal 2015.
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