Is Calavo Growers’ Stock Set To Reverse Course?

Calavo Growers, Inc. (NASDAQ: CVGW), a leading distributor of avocados and other perishable foods, is catching the eye of Lake Street analyst Ben Klieve following the company's Q1 earnings report.

The firm are particularly enthusiastic about Calavo Growers' performance, underscoring two significant developments: the indefinite postponement of the FCPA investigation and the initial inflows from a material deferred tax asset from Mexican authorities. Avocado market conditions appear robust, and Calavo enters its seasonally strongest period with substantial momentum – the most substantial in years according to Klieve, who maintains a Buy rating and a bullish $35 price target for the stock.

Calavo Growers, headquartered in Santa Paula, California, operates primarily within the consumer defensive sector, focusing on the distribution of avocados, prepared avocados, and other perishable foods across retail grocery, foodservice, and beyond, under various respected trademarks. The company, founded in 1924, reinforces consumer and industry trust through its reputed Calavo brand and multiple trademarks like RIPE NOW! and Avo Fresco.

With a market capitalisation hovering around $412 million, Calavo Growers' stock ended the week with a gain of 7.82% on Friday. With a 52-week range between $20.30 and $30.50, this is one that has been on a relative downtrend. evidenced by a 9.2% fall YTD, and 19.2% over the past 12 months. The firm offers a dividend rate of $0.80, yielding 3.67% and a payout ratio at approximately 76.92%. Calavo's revenues report at $688.32 million with a net income to common of $13.80 million.

The consensus price target of $33 reflects a healthy perceived upside from the street, with the stock requiring a shift in sentiment to break out of the current downtrend. Whether this latest set of earnings, and the upcoming period can help the bulls will be known in time, but for now, the price is on the verge of breaking out of the downward channel. A firm break with volume could indicate a sentiment shift, whilst a breakdown could signify more short term pain.

As the company and analyst affirm a positive outlook moving into Calavo's most active season, their position within the food distribution industry among consumer defensive stocks appears promising.