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Investing.com - BofA Securities lowered its price target on ConAgra (NYSE:CAG) to $18.00 from $20.00 on Thursday, while maintaining an Underperform rating on the food company’s stock. The company’s shares, currently trading at $19.49, have declined over 24% year-to-date, according to InvestingPro data.
The price target reduction follows ConAgra’s initial fiscal year 2026 financial outlook, which BofA noted was "well below street" expectations. The company, with current annual revenue of $11.74 billion, projected organic sales growth between -1% and +1%, operating margin of approximately 11-11.5%, and adjusted earnings per share of $1.70-$1.85. Despite recent challenges, ConAgra maintains a notable 6.87% dividend yield.
ConAgra’s fourth-quarter fiscal 2025 earnings per share missed BofA’s estimates on sales and gross margin performance. The food manufacturer now faces elevated cost inflation as protein, which represents about 12% of its cost of goods sold basket, is estimated to inflate by double digits.
Overall inflation for ConAgra is expected to reach 7%, with 4 percentage points from core inflation and 3 percentage points attributed to tariffs. While chicken costs have seen some relief, other proteins including beef, pork, and turkey have increased in price.
BofA noted that fiscal year 2026 will include continued investment in innovation, capital expenditures, and merchandising as ConAgra aims to take steps toward re-accelerating volume growth.
In other recent news, Conagra Brands reported their fourth-quarter fiscal 2025 earnings, which fell short of analysts’ expectations. The company announced an earnings per share (EPS) of $0.56, missing the forecasted $0.59, while revenue reached $2.78 billion, below the anticipated $2.85 billion. This earnings miss marks a deviation from previous quarters where Conagra had met or exceeded market forecasts. Despite the setback, Conagra plans to pay down $700 million in debt this year, focusing on financial health and stability. The company is also emphasizing premiumization and innovation in its frozen and snacks categories. Looking ahead, Conagra anticipates slight declines in the first half of fiscal 2026, with improvements expected in the second half. Additionally, Conagra forecasts an operating margin of 11-11.5% for the upcoming fiscal year. Analyst firms like Barclays (LON:BARC) and Bank of America have taken note of Conagra’s strategic focus on brand building and maintaining strong consumer connections.
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