ConAgra stock price target lowered to $21 from $26 at Stifel on weak outlook

Investing.com - Stifel has lowered its price target on ConAgra (NYSE:CAG) to $21.00 from $26.00 while maintaining a Hold rating following the company’s fourth-quarter earnings miss. The stock, currently trading at $19.49, is near its 52-week low of $18.82, though InvestingPro analysis suggests the stock may be undervalued at these levels.

ConAgra reported fourth-quarter results that fell short of Stifel’s expectations, with earnings missing estimates by $0.05 per share due to lower-than-anticipated sales and margin performance. The company’s organic sales decreased 3.5% during the quarter. Despite recent challenges, the company maintains a P/E ratio of 8.49x and a substantial free cash flow yield of 14%.

Gross margin contracted 184 basis points compared to the prior year, falling to 25.8%, as lower sales, inflation, and negative operating leverage outweighed productivity savings during the fourth quarter.

ConAgra issued its initial fiscal year 2026 guidance, projecting organic sales between -1% and +1%, operating margin of 11% to 11.5% (representing a 280 basis point decline at the midpoint), and earnings per share between $1.70 and $1.85, which translates to a 19% to 26% decrease.

The company attributed the projected earnings decline to several factors, including a 5 percentage point net headwind from divestitures, 11% drag from inflation and tariffs after accounting for productivity efforts, 7% drag from investments to drive frozen and snacks volume growth including chicken supply chain investments, and a 4% headwind from incentive compensation reset. Despite these challenges, the company maintains a notable 7.18% dividend yield. For deeper insights into ConAgra’s valuation and growth prospects, check out the comprehensive research available on InvestingPro, which includes 14 additional key insights about the company.

In other recent news, ConAgra Brands reported its fourth-quarter fiscal 2025 earnings, revealing a miss on both earnings per share (EPS) and revenue expectations. The company posted an EPS of $0.56, which fell short of the forecasted $0.59, and reported revenue of $2.78 billion, below the anticipated $2.85 billion. This performance has led to a cautious outlook for fiscal year 2026, with ConAgra projecting organic sales growth between -1% and +1% and an operating margin of approximately 11-11.5%. Analyst firms have responded to these developments with adjustments to their evaluations of ConAgra. Evercore ISI lowered its price target to $24.00, while maintaining an "In Line" rating, highlighting the importance of stabilizing volume and share for potential growth. Wells Fargo (NYSE:WFC) reduced its price target to $20.00, expressing concerns over ConAgra’s sales trajectory and margin pressures. BofA Securities also decreased its price target to $18.00, citing a weak fiscal year 2026 outlook as a significant factor. These recent developments underscore the challenges ConAgra faces in navigating cost inflation and competitive market conditions.

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