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Investing.com - RBC Capital has lowered its price target on ConAgra (NYSE:CAG) to $22.00 from $25.00 while maintaining a Sector Perform rating on the stock. The company currently trades at $18.89, near its 52-week low of $18.82, with InvestingPro analysis suggesting the stock is significantly undervalued at these levels.
The price target reduction follows what RBC described as a "particularly challenging quarter" for ConAgra, accompanied by a soft fiscal year 2026 guidance driven by inflationary pressures and tariffs. The company’s revenue declined by 3.64% in the last twelve months, though it maintains a healthy dividend yield of 7.18% and trades at an attractive P/E ratio of 7.86x.
According to RBC Capital, ConAgra is choosing to heavily invest during this difficult period to support its brands, supply chain flexibility, and volume recovery, which the firm views as essential for the stock to gain traction.
While RBC considers this investment strategy appropriate, the firm notes that earnings estimates will "come down materially" as a result of these decisions.
The fiscal year 2026 guidance, which projects an operating income margin of 11-11.5%, reduces visibility of ConAgra returning to what RBC calls an "on algorithm" profitability year, which would feature mid to high teens margins.
In other recent news, ConAgra Brands has faced several analyst downgrades and price target reductions amid ongoing financial challenges. Stifel lowered its price target for ConAgra to $21 from $26 following a fourth-quarter earnings miss, where earnings per share fell short by $0.05 due to lower sales and margin performance. The company reported a 3.5% decrease in organic sales, with gross margin contracting by 184 basis points. UBS also reduced its price target to $20, highlighting skepticism about ConAgra’s fiscal year 2026 outlook, especially its projected revenue growth. TD Cowen adjusted its price target to $19, citing concerns over ConAgra’s margin structure and investment pressures. Meanwhile, Bernstein cut its target to $21, noting the need for significant reinvestment to address growth challenges, which has led to earnings guidance below consensus estimates. Evercore ISI set a new price target of $24, indicating expectations of a transition year in 2026 with a significant decline in earnings per share. These developments underscore the difficulties ConAgra faces in balancing investment needs with market pressures.
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