Stifel has revised its price target for Westrock Coffee (WEST, Financial), lowering it from $12 to $10 while maintaining a Buy rating on the shares. This adjustment is part of a broader update within the firm's Food group coverage, where sales and earnings per share (EPS) projections have been recalibrated in response to the current outlook and foreign exchange dynamics.
Analysts have projected that the Food group as a whole might experience an EPS decline of 9% by 2025. This anticipated decrease is attributed to margin pressures stemming from inflation and increased investment levels, which are likely to counteract a modest 1% growth in organic sales. These factors are driving Stifel's cautious stance on Westrock Coffee and similar entities within the sector.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for Westrock Coffee Co (WEST, Financial) is $10.40 with a high estimate of $13.00 and a low estimate of $9.00. The average target implies an upside of 76.87% from the current price of $5.88. More detailed estimate data can be found on the Westrock Coffee Co (WEST) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, Westrock Coffee Co's (WEST, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
WEST Key Business Developments
Release Date: March 11, 2025
- Segment Adjusted EBITDA (Beverage Solutions): $17.8 million, up 53% year-over-year.
- Combined Segment Adjusted EBITDA: $21 million, up 53% year-over-year.
- Full Year Adjusted EBITDA: $60 million, up 33% over the prior year.
- Consolidated Adjusted EBITDA (Full Year 2024): $47.2 million, including $12.8 million of Conway scale-up operating costs.
- Consolidated Adjusted EBITDA (Q4 2024): $13.3 million, burdened by $7.6 million of Conway scale-up operating costs.
- Net Sales (Q4 2024): Increased by 6.5% compared to Q4 2023.
- Gross Profit (Q4 2024): Increased by 9.2% compared to Q4 2023.
- Net Sales (Full Year 2024): Decreased by 1.6% compared to 2023.
- Gross Profit (Full Year 2024): Increased by 10% over the prior year.
- Beverage Solutions Segment Net Sales (2024): $659.4 million, an 8.8% decrease compared to 2023.
- Beverage Solutions Segment Adjusted EBITDA (2024): $53.6 million, a 29% increase over 2023.
- SS&T Segment Net Sales (2024): $191.3 million, driven by a 40% increase in volumes.
- SS&T Segment Adjusted EBITDA (2024): $6.4 million, compared to $3.5 million in 2023.
- Capital Expenditures (2024): $160 million, with $140 million spent on the Conway facility.
- Consolidated Unrestricted Cash and Undrawn Revolving Credit (Year-end 2024): Approximately $90 million.
- Guidance for 2025 Consolidated Adjusted EBITDA: $66.5 million, including $15 million of Conway scale-up operating costs.
- Guidance for 2026 Consolidated Adjusted EBITDA: $140 million, with no Conway scale-up operating costs.
- Beverage Solutions Net Secured Leverage Ratio (End of 2024): 4.7 times.
- Expected Beverage Solutions Net Secured Leverage Ratio (End of 2026): 3 times.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Westrock Coffee Co (WEST, Financial) reported a 53% increase in segment adjusted EBITDA for its beverage solutions unit, reaching $17.8 million in Q4 2024.
- The company achieved a 52% year-over-year increase in its Sustainable Sourcing and Traceability (SS&T) segment.
- Westrock Coffee Co (WEST) successfully launched and largely sold out its can and glass bottle capacity at the Conway extract and RTD facility.
- The company expanded its customer base by onboarding new CPG customers and securing contracts with over a dozen premier global brands.
- Westrock Coffee Co (WEST) implemented new data insights and AI to enhance commodity cost forecasting and risk management, improving operational efficiency.
Negative Points
- Single serve cup volumes remained below forecast for much of 2024, impacting expected revenue.
- Higher green coffee prices could potentially impact consumer demand and customer orders in the latter half of 2025.
- The company faced delays in monetizing its Conway investment, with scale-up costs impacting financial results.
- Westrock Coffee Co (WEST) had to adjust its 2025 guidance due to potential risks from higher coffee prices and conservatism in scaling operations.
- The company experienced a 1.6% decrease in net sales for the full year 2024, despite an increase in gross profit.
