) to neutral from buy.
Analyst Farha Aslam says part of J.M. Smucker's strategy is to acquire leading brands, particularly with a North American focus. He says International Multifoods fits in well with Smucker, the maker of peanut butter and jelly brands. Still, at 10.1 times his estimated calendar 2004 EBITDA, and 18.1 times the estimated calendar 2004 earnings per share, the price Smucker paid for International Multifoods is rich.
Aslam notes International Multifoods purchased the Pillsbury Doughboy brand and several smaller brands in 2001, but repeatedly missed expectations because of competitive dynamics in the baking-mix category. He also says International Multifoods' portfolio is heavily carbohydrate-focused (some of its other brands include Hungry Jack pancake mixes and potato side dishes), at a time when many Americans are reducing their intake of carbohydrates.