Lamb Weston: Judicious Investments Set to Support Category Leadership Position but Shares Rich

We don't plan any incremental change to our $74 fair value estimate following narrow-moat Lamb Weston's Oct. 11 investor day, though we continue to plan a high-single-digit bump to our intrinsic valuation following the firm's first-quarter earnings due to a rosier fiscal 2024 outlook and time value. More concretely, while we believe that the firm's planned investments (as laid out at investor day) should drive an inflection point in sales, higher planned capital spending and selling, general, and administrative expenses largely dilute those impacts—primarily as the firm strives to invest in supporting its capacity expansion. Incorporating the guidance, we now expect those accounts to comprise roughly 9% and 11% of sales in the longer term, respectively, up from the 5%-6% and 9% estimates we've previously contemplated. Still, shares continue to appear overvalued.