Why McCormick & Company, Incorporated Might Keep Falling

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of McCormick & Company, Incorporated slipped about 1% this morning after Deutsche Bank downgraded the spices and seasonings specialist from buy to hold.

So what: Along with the downgrade, analyst Eric Katzman lowered his price target to $66 (from $73), representing just 1% worth of upside to its closing price on Wednesday. While contrarians might be attracted to yesterday's earnings-related plunge, Katzman thinks there might be room to fall given the ongoing sluggishness in the U.S. and Europe.

Now what: According to Deutsche, McCormick's risk/reward trade-off isn't too attractive at this point. "When even a highly focused company like McCormick cannot deal with consumer / retail fragmentation, it is clear that no player is immune to US/EU challenges," noted Katzman. "After 10+ years of expanding its presence in niches (spices, DSM, marinades, grilling, ethnic), McCormick is struggling as bifurcation (see our updated Quadrant Analysis) occurs at the high and low end of the market." When you couple those challenges with McCormick's industry-premium P/E of 20, it's tough to disagree with Deutsche's downgrade. 

More reliable ways to grow
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

The article Why McCormick & Company, Incorporated Might Keep Falling originally appeared on Fool.com.

Brian Pacampara has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story