Kraft Heinz: Rare Upgrade from Morgan Stanley

Kraft Heinz (KHC) shares got a rare upgrade on March 4. Morgan Stanley upgraded Kraft Heinz stock to “equal weight.”

Amit Singh - Author

Mar. 4 2019, Published 10:33 a.m. ET

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Morgan Stanley sees limited downside

Kraft Heinz (KHC) shares got a rare upgrade on March 4. Morgan Stanley upgraded Kraft Heinz stock to “equal weight” from “underweight.” Multiple analysts downgraded Kraft Heinz stock and lowered their estimates following the company’s lackluster fourth-quarter performance and sluggish guidance. Write-downs on two of the company’s brands and an SEC probe announcement dented investors’ confidence in the stock.

Due to the significant decline in Kraft Heinz’s share price, Morgan Stanley sees limited downside and expects the company to meet its 2019 estimates.

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Earlier, UBS downgraded Kraft Heinz stock to “neutral” from “buy” and lowered the target price to $39 from $55. Meanwhile, Stifel downgraded Kraft Heinz to “hold” from “buy” and reduced the target price to $35 from $72. J.P. Morgan lowered Kraft Heinz to “neutral” from “overweight.” Credit Suisse lowered its target price to $33 from $42 per share.

Kraft Heinz’s sales and earnings are expected to decline in 2019. Currency volatility, low pricing, and increased competition will likely impact the company. Inflation in commodity costs, promotions, and a rise in interest expenses also remain a drag.

Rating and target price

Among the 22 analysts providing recommendations on Kraft-Heinz stock, 17 recommended a “hold,” three recommended a “buy,” and two recommended a “sell.” Analysts maintained a target price of $38.53 per share, which implies an upside of 18.9% based on its closing price of $32.40 on March 1. Kraft Heinz shares were trading ~2% higher in the pre-market session.


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