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Kraft Heinz Stock Could Face More Downgrades

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More pressure?

Most analysts continue to recommend a “buy” on Kraft Heinz (KHC) stock despite the company’s weak financial performance and sluggish outlook. Kraft Heinz might gain from consolidation in the food industry. Analysts expect Kraft Heinz to acquire fast-growing brands, which could accelerate its sales growth rate.

However, we expect the stock to remain pressured in the near term, which reflects pressure on the company’s sales and profitability. Kraft Heinz slashed its annual dividend ~36%, which could hurt investors’ sentiment. Given the company’s sluggish performance, J.P. Morgan downgraded Kraft Heinz stock to “neutral” from “overweight” and lowered its target price 29% to $37. We expect more analysts to lower their target price on Kraft Heinz stock.

Earlier, Deutsche Bank downgraded Kraft Heinz stock to “hold” from “buy.” More competition from private label products, increased costs, and promotional spending to increase the demand could hurt the company’s sales and profitability.

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Analysts’ rating and target price

Among the 22 analysts covering Kraft Heinz stock, 12 recommended a “buy,” six recommended a “hold,” and four recommended a “sell.” Analysts have a consensus target price of $55.89 per share on Kraft Heinz, which could decline.

Analysts have a “neutral” rating on Kellogg (K), Hershey (HSY), J.M. Smucker (SJM), and General Mills (GIS) stock. Analysts recommend a “buy” on Conagra Brands (CAG) and Mondelēz (MDLZ) stock.

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