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On Wednesday, Stifel analysts reaffirmed their Hold rating on Kellogg Company (NYSE:K), with a steady price target of $18.00. The decision follows Kellogg’s report of weaker-than-expected financial results for the first quarter and a downward revision of its full-year 2025 (FY25) guidance. The company’s EBITDA for the quarter was $72 million, a decrease of 4% from the previous year. With a current market capitalization of $1.55 billion and a P/E ratio of 26.6x, InvestingPro analysis suggests the stock is currently undervalued. Additionally, Kellogg experienced a 5.6% drop in organic sales, including an 8.6% decline in volume.
Kellogg’s U.S. Cereal category sales saw a 0.8% decrease over the quarter, while its U.S. sales fell by 4.5%. This decline in sales was attributed to the company losing market share to competitors in the natural, organic, and health-focused brand segments. Despite these challenges, InvestingPro data shows the company maintains a solid 29.2% gross profit margin and offers a 3.7% dividend yield. In response to the current market conditions, Kellogg has revised its FY25 EBITDA guidance to a range of -2% to flat, a significant reduction from the previously forecasted range of +4% to +6%. The company’s organic net sales guidance has also been adjusted to -2% to -3%.
The analysts at Stifel noted that the majority of the anticipated 500 basis points of improvement for Kellogg is expected to occur in late 2026. This improvement is projected to stem from the benefits of capital investments and the closure of a plant. Despite the revised guidance and the current performance challenges, Stifel continues to advise a Hold position on Kellogg stock. For deeper insights into Kellogg’s financial health and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.
In other recent news, WK Kellogg Co. reported its first-quarter 2025 earnings, which fell short of market expectations. The company recorded an earnings per share (EPS) of $0.20, missing the anticipated $0.36, and revenue of $663 million, which was below the projected $696.92 million. These results have raised concerns among investors about Kellogg’s ability to meet financial targets in a challenging market environment. Additionally, Evercore ISI analysts have adjusted their outlook on Kellogg, reducing the stock price target from $20.00 to $19.00 while maintaining an In Line rating. The firm expressed concerns over Kellogg’s current sales challenges and increased promotional spending, leading to a downward revision of their organic sales growth forecast. Despite these challenges, management remains optimistic about sequential improvements throughout 2025 and expects a 500 basis points EBITDA margin expansion by 2026. Analysts from Evercore ISI also noted Kellogg’s plans to innovate and market towards protein-focused consumers as part of its strategic efforts. The company is navigating a difficult market landscape, with a focus on health and wellness trends, and aims to leverage its brand portfolio to maintain a competitive position.
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