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On Monday, Stifel analysts maintained their Hold rating on Kellanova (NYSE:K) shares, keeping their price target steady at $83.50. The firm’s analysts highlighted the ongoing process of Mars™ acquiring Kellanova, anticipated to be finalized in the first half of 2025. According to InvestingPro data, the stock is currently trading near its 52-week high of $83.22, with six analysts recently revising their earnings expectations downward. The company’s market capitalization stands at $28.68 billion. Kellanova recently reported its first-quarter earnings per share (EPS) for 2025 at $0.90, which was an 8% decrease on a constant currency basis and $0.11 short of Stifel’s expectations.
The company’s organic revenue saw a slight increase of 0.7%, primarily due to pricing in Emerging Markets. This was despite a volume decline of 2.5% across all divisions, somewhat offset by a 3.2% positive impact from price and mix. However, Kellanova’s gross margin contracted by 80 basis points from the previous year, coming in at 34.9%. This reduction was attributed to a combination of higher costs, an unfavorable divisional mix, and reduced operating leverage, which overshadowed the benefits gained from pricing strategies and productivity improvements.
Due to the expected acquisition by Mars™, Kellanova has refrained from providing financial guidance. In light of the first-quarter performance and softer volume trends, Stifel has revised its forecast for Kellanova’s organic sales and reduced the full-year 2025 EPS estimate to $3.75. This new estimate is a $0.17 decrease from their earlier projection, taking into account both the shortfall in the first quarter and the anticipated weaker volume going forward.
The analysts at Stifel concluded their commentary by reiterating their Hold rating on Kellanova shares and affirming their price target of $83.50, signaling a steady stance on the stock amidst the acquisition developments and recent financial results. With a P/E ratio of 20.87 and generally low price volatility, the stock is currently trading near its InvestingPro Fair Value. For deeper insights into Kellanova’s valuation metrics and comprehensive analysis, investors can access the full Pro Research Report, available exclusively on InvestingPro, along with 8 additional ProTips and extensive financial metrics.
In other recent news, Kellanova reported first-quarter earnings and revenue that did not meet analyst expectations. The company posted adjusted earnings per share of $0.90, falling short of the anticipated $1.01. Revenue for the quarter was $3.08 billion, which was below the projected $3.18 billion. Compared to the same quarter last year, revenue decreased by 2.5%. Despite these results, CEO Steve Cahillane expressed optimism, highlighting strong growth in emerging markets and the snacks segment. However, Kellanova did not provide guidance for the upcoming quarter or the full fiscal year, leaving investors without forward-looking projections. This lack of guidance has led investors to adopt a cautious approach. The company’s shares remained relatively unchanged following the earnings announcement.
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