Analysts Remain Upbeat on CAG Stock, Expect Further Upside



Favorable outlook

Conagra Brands (CAG) is among the few packaged food companies for which analysts maintain a favorable outlook. Besides Conagra Brands, analysts have “buy” recommendations on Mondelēz (MDLZ) stock. They have “neutral” ratings on other major packaged food stocks, including the Kellogg Company (K), General Mills (GIS), and the J.M. Smucker Company (SJM).

Strength in Conagra Brands’ base business led by improved organic volumes and pricing and incremental sales from acquisitions is likely to support its sales growth in the coming quarters. Meanwhile, productivity savings and favorable pricing and mix are expected to drive its operating margin.

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The company’s EPS are likely to remain pressured in the near term. However, its bottom line is expected to stabilize in fiscal 2020 and register healthy growth driven by a reduction in debt, operating margin expansion, and improved organic sales. The company is also trading at a lower valuation multiple than its peers and offers a healthy dividend yield.

Rating and target price summary

Among the 12 analysts providing ratings on Conagra Brands stock, ten have given it “buys,” one has given it a “hold,” and one has given it a “sell.” Analysts have a target price of $30.45 per share on CAG, which implies a potential upside of 17.9% based on its closing price of $25.82 on March 21.

JPMorgan Chase raised its target price on CAG following the company’s stronger-than-expected bottom line performance in the third quarter of fiscal 2019. JPMorgan Chase now has a target price of $30 per share on CAG, up from $27. Jefferies has lowered its target price on the stock to $38 from $44. Despite the reduction, Jefferies’ target price indicates a potential upside of 47.2%.


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