While McCormick & Company Inc (NYSE:MKC) delivered an earnings beat for the third quarter, its 2025 outlook reflects increased tariff-related cost pressures, according to BofA Securities.
The McCormick Analyst: Analyst Peter Galbo maintained a Buy rating and price target of $96.
The McCormick Thesis: The company reported adjusted earnings of 85 cents per share, beating consensus of 81 cents per share, Galbo said in the note.
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The beat was driven by sales and SG&A leverage, while gross margins were below expectations due to higher commodity and tariff costs, he added.
McCormick's tariff exposure has "increased to ~140mm gross annualized (~$70mm gross 2025 exposure) from ~$90mm gross annualized (~$50mm 2025 exposure)," the analyst wrote. He added, however, that the tariff exposure remains within investor expectations.
Management lowered the adjusted earnings outlook for 2025 to $3.00-$3.05 per share, from their prior projection of $3.03-$3.08) per share, to reflect the gross impact from tariffs of around $70 million, the analyst further stated.
MKC Price Action: Shares of McCormick had declined by 3.10% to $66.17 at the time of publication on Tuesday.
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