Lamb Weston upgraded to buy on expected margin growth and cost cuts by 2027

Lamb Weston has been upgraded to a buy rating due to anticipated stronger profit margins by fiscal 2027. The company expects cost reductions from the removal of palm oil tariffs and lower capital expenditures, which should improve margins and increase cash available for stock buybacks. Activist investor Starboard Value is pushing for cuts in selling, general, and administrative expenses and may push for selling low-margin international assets, although management has not committed to these changes. Despite some risks from product mix, an EBITDA margin increase of 100 basis points and an 11% upside to a $44.46 price target are projected.