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On Thursday, Bernstein analysts led by Alexia Howard revised the price target for Kraft Heinz Company (NASDAQ:KHC) shares, reducing it to $34 from the previous $40, while maintaining an Outperform rating. Currently trading at $28.62, near its 52-week low of $27.25, InvestingPro analysis suggests the stock is undervalued. Howard’s analysis acknowledged that Kraft Heinz’s fiscal year 2025 (FY25) guidance was somewhat disappointing in terms of sales and adjusted EBIT, but noted potential for volume growth through price investments.
Kraft Heinz’s recent performance presented a combination of outcomes, with organic sales decreasing by 3.1%, reflecting the broader revenue decline of 3.8% over the last twelve months. Despite these challenges, the company surpassed expectations in terms of margins and earnings per share (EPS), maintaining a healthy gross profit margin of 34.65%. The Bernstein team highlighted Kraft Heinz’s efforts to enhance its top-line results, particularly through increased focus on marketing and innovation. The company’s strategy to adjust pricing and implement effective promotions might be the key to achieving volume growth, according to Howard. For investors seeking income, the stock offers an attractive dividend yield of 5.59%.
The company is expected to move past the decline in Lunchables sales, which suffered following negative media attention in April 2024. Howard emphasized the importance of monitoring sales trends in the upcoming months to confirm the effectiveness of these strategic changes.
Despite the price target adjustment, Bernstein remains optimistic about Kraft Heinz’s prospects, citing the potential for the company to regain market share in key categories and achieve its long-term growth targets by fiscal year 2026 (FY26). The new price target is based on a lowered market-implied enterprise value to next twelve months EBITDA multiple, from 10.0x to 8.7x, and an increased EBITDA estimate for the next 12-24 months, from $6,771 million to $6,886 million.
In other recent news, Kraft Heinz has experienced a series of adjustments to its stock price target by various firms following its fourth-quarter earnings release. CFRA analyst Arun Sundaram reduced the 12-month price target for Kraft Heinz to $32 from $41, despite an 8% increase in adjusted earnings per share to $0.84, outperforming estimates by $0.06. Stifel analysts maintained their Hold rating on Kraft Heinz shares, with a steady price target of $32.00, following a 7.7% increase in EPS to $0.84. Jefferies analyst Rob Dickerson adjusted the price target for Kraft Heinz stock to $30.00 from $34.00, while maintaining a Hold rating on the shares. Lastly, Citi analyst Thomas Palmer revised the price target for Kraft Heinz shares to $34 from $38, while still maintaining a Buy rating on the stock. These recent developments reflect analysts’ responses to the company’s performance and future expectations.
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