Stifel maintains Hold rating on Kraft Heinz stock amid spin-off reports

Investing.com - Stifel has reiterated a Hold rating and $30.00 price target on Kraft Heinz Company (NASDAQ:KHC), currently trading at $27.14, following reports that the food giant is considering a major business restructuring. InvestingPro data shows the stock appears undervalued, with a P/E ratio of 12.2 and an attractive dividend yield of 5.9%.

According to a Friday news report, Kraft Heinz, with its current market capitalization of $32.1 billion and a GOOD Financial Health score according to InvestingPro, is evaluating the possibility of spinning off a significant portion of its grocery business into a separate entity that could be valued at up to $20 billion.

The potential spin-off would likely include slower growth and highly competitive or commoditized categories, while the remaining company would retain priority platforms such as sauces, condiments, snacking, and easy meals.

Kraft Heinz’s board has not yet made a final decision on the matter and is still determining which specific brands would be included in the transaction, according to the report.

In May, Kraft Heinz had confirmed it was evaluating potential strategic transactions to enhance shareholder value, and a company spokesperson did not deny the current spin-off report when questioned.

In other recent news, Kraft Heinz announced the sale of its Italian infant and specialty food business to NewPrinces S.p.A., with the transaction expected to conclude by the end of 2025, pending regulatory approval. This deal includes the sale of brands such as Plasmon, Nipiol, and Dieterba, as well as the production facility in Latina, Italy, which employs approximately 300 people. Additionally, Kraft Heinz has extended the maturity date of its $4 billion revolving credit facility by one year to 2030, in agreement with its lenders and JPMorgan Chase (NYSE:JPM) Bank. The amendment also revises certain financial covenants under the credit agreement.

Moreover, Jefferies has lowered its price target for Kraft Heinz to $26, maintaining a Hold rating, citing increased promotional activity and potential asset divestments. The firm expressed concerns about market trends and suggested that a company split might drive change. In executive news, Marcos Eloi Lima, the Executive Vice President and Chief Procurement and Sustainability Officer, will step down, with Janelle Aydin set to assume his role. These developments reflect Kraft Heinz’s ongoing strategic adjustments and financial maneuvering.

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