Shares of The Simply Good Foods Company (NASDAQ: SMPL) climbed more than 5% intra-day Monday after Jefferies upgraded the stock to Buy from Neutral, while adjusting its price target to $22 from $23.
The firm said Simply Good Foods has benefited from a long-term shift toward higher protein consumption and convenient nutrition products, allowing the company to deliver revenue growth averaging about 10% annually over the past four years.
Within the company’s portfolio, the nutrition bar and protein chip brand Quest has driven much of the growth, expanding at a compound annual growth rate of about 17%, while the Atkins weight-management brand has declined roughly 5%.
Jefferies noted that Simply Good Foods’ acquisition of OWYN, which now represents about 10% of fiscal 2025 sales and expanded the company’s presence in plant-based protein shakes, has recently faced slower growth due to product quality concerns that affected brand perception.
The firm said increasing competition and inflation have begun to pressure both growth and margins, mirroring trends seen across other specialized protein-focused companies.
Jefferies now expects revenue and earnings to grow at compound annual rates of roughly 2% and 1%, respectively, from fiscal 2026 through fiscal 2028.
Despite these lower projections, the firm believes the current valuation — around five times forward EBITDA after declining significantly over the past year — underestimates the strength of the Quest brand and the strategic value of the company’s portfolio.
Using a sum-of-the-parts valuation excluding the Atkins brand due to category headwinds, Jefferies assigned EBITDA multiples of 10x to Quest and 8x to OWYN, assuming a roughly 300-basis-point profitability spread. The analysis suggests an implied equity value of approximately $2 billion.
Jefferies said the recent management change introduces several potential strategic paths for the Atkins and OWYN brands, but believes the current valuation provides a meaningful margin of safety.
