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Investing.com - Barclays (LON:BARC) maintained its Equalweight rating and $29.00 price target on Kraft Heinz Company (NASDAQ:KHC), currently trading at $27.14, as the food giant reportedly considers splitting its business. InvestingPro analysis shows the company trades at an attractive P/E ratio of 12.2 and maintains a GOOD financial health score.
The potential breakup would involve spinning off a significant portion of Kraft Heinz’s grocery business, including many Kraft products, into a separate entity potentially valued at up to $20 billion, according to a recent Wall Street Journal report cited by Barclays. With a current market capitalization of $32.1 billion and an impressive 5.9% dividend yield, the company offers significant value to shareholders.
The remaining company would retain the faster-growing sauces, spreads, and condiments businesses, effectively creating separate "GrowthCo" and "CashCo" entities similar to previous industry splits like Kraft/Mondelez and Kellanova/WK Kellogg.
Barclays noted that Kraft Heinz is still determining which brands would belong to each entity and has discussed other scenarios with advisors, with the current plan appearing to keep only the Taste Elevation (condiments) business rather than its entire Accelerate platform.
The report aligns with Kraft Heinz’s May 20, 2025, announcement that it was evaluating strategic transactions to unlock shareholder value, which came around the same time Berkshire Hathaway (NYSE:BRKa) announced plans to step down from its board seats.
In other recent news, Kraft Heinz has announced an agreement to sell its Italian infant and specialty food business to NewPrinces S.p.A., with the transaction expected to close by the end of 2025 pending regulatory approval. This deal includes the sale of brands such as Plasmon and Nipiol, and a production facility in Latina, Italy. Additionally, Kraft Heinz is reportedly considering a spin-off of a significant portion of its grocery business, which could be valued at up to $20 billion. The company has yet to make a final decision on which brands might be included in this potential restructuring.
Analyst activity has been notable, with Morgan Stanley (NYSE:MS) reiterating an Underweight rating on the stock, citing concerns about market share performance and profitability. Stifel has maintained a Hold rating, while Jefferies has lowered its price target to $26, noting increased promotional activity and its impact on retail price realization. In executive news, Kraft Heinz announced that Marcos Eloi Lima will step down as Executive Vice President and Chief Procurement and Sustainability Officer, with Janelle Aydin set to assume the role. These developments come as Kraft Heinz continues to navigate a complex market environment.
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