Kraft Heinz stock target cut to $30 by Evercore ISI

On Wednesday, Evercore ISI adjusted its outlook on Kraft Heinz Company (NASDAQ:KHC), reducing the price target from $33.00 to $30.00 while maintaining an In Line rating. The stock, currently trading at $28.87 and near its 52-week low of $27.25, has seen 8 analysts revise their earnings estimates downward according to InvestingPro data. The revision follows a reassessment of the company’s earnings projections amid softer sales and increased reinvestment needs.

Evercore ISI cites several factors contributing to the revised earnings per share (EPS) estimates for 2025 and 2026, including weaker domestic retail sales, higher spending on media and promotions, inflation rates of 5-7% with less pricing offset, and slower growth in the global foodservice sector, which represents 10% of Kraft Heinz’s sales. The new price target of $30.00 is based on 11.5 times the firm’s projected 2026 EPS, compared to the 5-year price-to-earnings (P/E) range of 10-16 times. Currently, the company trades at a P/E ratio of 13.19x, with revenue showing a 4.25% decline in the last twelve months.

The firm’s analysts believe that while Kraft Heinz’s stock downside may be limited due to a 2025 estimated P/E of around 11 times, a dividend yield of 5.54%, and a free cash flow yield of 9%, patience is required as the company develops and supports new growth initiatives. InvestingPro analysis suggests the stock is currently undervalued, with additional ProTips available for subscribers looking to make informed investment decisions. The expectation is that more effective innovation, promotion, and advertising will stabilize sales trends by 2026, leading to balanced, profitable growth in 2027.

Following Kraft Heinz’s first-quarter earnings and subsequent discussions with the company, Evercore ISI has lowered its 2025 consolidated organic sales forecast from a 2% decline to a 3% decline, with EPS estimates reduced from $2.70 to $2.57, marking a 16% year-over-year decrease. The downward revision reflects ongoing volume weakness in North American retail and now flat sales expectations in the global away-from-home segment. For deeper insights into Kraft Heinz’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.

The analysis also notes that operating income is projected to decline by 5-9% year-over-year due to lower sales, higher inflation, and increased investments such as promotions. Despite facing higher inflation, Kraft Heinz plans to be tactical with pricing, particularly with coffee and hydration products, and will focus on cost of goods sold (COGS) productivity improvements of over 3% and managing operating costs, including lower incentive compensation.

In other recent news, Kraft Heinz Co. reported its first-quarter earnings for 2025, revealing an adjusted earnings per share (EPS) of $0.62, slightly surpassing analysts’ forecast of $0.60. Despite this EPS beat, the company faced challenges as its revenue reached $6 billion, falling short of the expected $6.02 billion. Organic net sales declined by 4.7%, and the company revised its 2025 guidance, forecasting a potential decline in organic net sales by 1.5% to 3.5%. Kraft Heinz returned nearly $900 million to shareholders through dividends and share repurchases during the quarter. The company is optimistic about emerging markets, expecting double-digit growth by the fourth quarter of 2025. Despite the revenue shortfall, Kraft Heinz maintained its market leadership in key categories and expanded its distribution in emerging markets. The company continues to face macroeconomic pressures, including inflation and potential tariffs, which could impact costs and pricing strategies. Analysts from various firms have noted these developments, reflecting on the company’s strategic efforts to manage inflation impacts and enhance brand value.

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