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On Wednesday, Bernstein analysts adjusted their outlook on Kraft Heinz Company (NASDAQ:KHC) shares, lowering the price target to $29 from the previous $31 while maintaining a Market Perform rating. The adjustment comes as the company faces challenges that include the impact of tariffs and the need for increased media investments. Currently trading at $28.78, near its 52-week low of $27.25, InvestingPro analysis suggests the stock is undervalued, with 8 analysts recently revising their earnings expectations downward.
Kraft Heinz has revised its 2025 guidance downward, acknowledging that sales trends in the U.S. remain weak. The company’s management does not anticipate a return to volume growth within this year despite making progress on implementing its new Brand Growth System. The company is experiencing continued pressures in key product categories such as Lunchables, Mac N Cheese, and Mayo. InvestingPro data reveals a 4.25% revenue decline in the last twelve months, though the company maintains a robust 5.54% dividend yield and trades at an attractive P/E ratio of 13.2.
The analyst pointed out that while the shift in Easter’s timing and moving past the negative impact of a Consumer Reports article on Lunchables from the previous year might offer some relief, these factors alone are not sufficient to reverse the trend of declining organic sales. The analyst commented on the company’s situation, stating, "At present, pressures in Lunchables, Mac N Cheese and Mayo persist, although the timing shift of Easter and lapping the adverse Consumer Reports Lunchables article from last year should help next time around." For deeper insights into Kraft Heinz’s financial health and future prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, which cover over 1,400 US stocks.
The report suggests that while this period may represent a low point for the company’s organic sales declines, there is still no clear catalyst that could lead to a turnaround in sales trends. As a result, the analysts have decided to maintain a cautious stance, opting to observe from the sidelines for the time being.
Bernstein’s revised price target reflects a more conservative valuation of Kraft Heinz shares, taking into account the current headwinds the company is facing. The analysts’ Market Perform rating indicates a neutral view on the stock, suggesting that they do not see significant upside or downside potential at this time.
In other recent news, Kraft Heinz reported its first-quarter earnings for 2025, revealing an adjusted earnings per share (EPS) of $0.62, which exceeded the forecast of $0.60. However, the company’s revenue of $6 billion fell short of the expected $6.02 billion. Despite the EPS beat, Kraft Heinz experienced a 4.7% decline in organic net sales and a 5.2% drop in adjusted operating income. The company returned nearly $900 million to shareholders through dividends and share repurchases, demonstrating its commitment to shareholder value. Emerging markets showed signs of recovery, with expectations for double-digit growth by the fourth quarter of 2025.
Evercore ISI recently adjusted its outlook on Kraft Heinz, reducing the price target from $33.00 to $30.00 while maintaining an In Line rating. The revision followed a reassessment of the company’s earnings projections amid softer sales and increased reinvestment needs. Evercore ISI cites factors such as weaker domestic retail sales and higher inflation rates as contributing to the revised earnings estimates for 2025 and 2026. The firm expects that more effective innovation and advertising will stabilize sales trends by 2026. Despite these challenges, Kraft Heinz plans to focus on cost of goods sold productivity improvements and managing operating costs.
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