Karat Packaging stock initiated at Neutral by BofA with $28 target

Investing.com - BofA Securities initiated coverage on Karat Packaging Inc (NASDAQ:KRT) with a Neutral rating and a $28.00 price target on Wednesday. According to KRT">InvestingPro data, the company currently trades at a P/E ratio of 15.8 and shows a GOOD overall financial health score.

The foodservice packaging supplier has transitioned its business model in recent years, shifting focus from manufacturing to distribution. Manufacturing sales now represent approximately 11% of business in 2024, down significantly from 26% in 2022. The company maintains strong financial metrics, with a notable 6.84% dividend yield and liquid assets exceeding short-term obligations.

BofA Securities notes that while it appreciates Karat Packaging’s business approach, the firm considers the stock fairly valued at current levels. The company supplies packaging, utensils, and other products to the foodservice industry.

Despite potential consumer macroeconomic risks, BofA expects Karat Packaging’s volumes to grow at high single-digit percentages, aligning with the company’s current revenue growth of 8%. The firm identifies several factors affecting the company’s sales, including consumer confidence, restaurant sales, food delivery, and e-commerce. For deeper insights into KRT’s growth potential and comprehensive analysis, check out the detailed Pro Research Report available on InvestingPro.

BofA Securities also highlights that employment trends remain an important metric to monitor for the foodservice packaging sector, noting that Karat operates in what it describes as a competitive industry with macroeconomic risks.

In other recent news, Karat Packaging Inc. reported its second-quarter earnings for 2025, exceeding both earnings per share (EPS) and revenue forecasts. The company achieved an EPS of $0.57, slightly above the anticipated $0.56. Additionally, revenue reached $124 million, surpassing the $123.97 million estimate. These results reflect positively on the company’s financial performance. Despite the favorable earnings and revenue figures, the stock experienced a decline in after-hours trading, though specific reasons for this were not detailed. Investors may be considering the broader market context and future guidance. These developments are part of the recent updates surrounding Karat Packaging .

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