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Investing.com -- Goldman Sachs has upgraded Kraft Heinz Co. (NASDAQ:KHC) to “neutral” from “sell,” citing a more balanced risk-reward outlook after the company disclosed its ongoing evaluation of strategic transactions.
The 12-month price target was raised to $27 from $25, incorporating a 15% weighting for potential M&A activity within the brokerage’s valuation framework.
Kraft Heinz’s shares have declined 26% since being added to Goldman’s Americas Sell List on Aug. 12, 2024, underperforming the S&P 500, which gained 13% over the same period. The stock closed at $26.03 as of June 24, 2025.
The upgrade follows Kraft Heinz’s May 20 announcement that it is exploring strategic options, which coincided with the resignation of two board members representing top shareholder Berkshire Hathaway (NYSE:BRKa).
With a 27.5% stake, Berkshire’s potential sell-down, as suggested by media reports, may pave the way for asset divestitures.
Prior reports have identified Oscar Mayer and the company’s coffee business as potential targets, which could free up capital for share buybacks.
Goldman now assigns Kraft Heinz an M&A Rank of 2, indicating a 15%–30% likelihood of a strategic transaction.
The brokerage values the company at 10.5x forward EV/EBITDA for M&A scenarios, aligned with historical industry transactions, which yields a valuation of $36.
Despite the rating upgrade, the analysts remain cautious due to persistent sales declines and market share losses.
Scanner data show continued underperformance across core categories such as cream cheese, mac and cheese, packaged lunchmeat, and lunch combos, which represent about 39% of tracked sales. U.S. retail sales were down 4% year over year as of June 14, according to NielsenIQ.
Sequential improvement was noted in some brands like Kraft Mac & Cheese, Lunchables, Capri Sun, and Kraft Mayo, following stepped-up pricing and innovation efforts.
However, these gains remain modest relative to overall performance. Net purchase intent for most surveyed brands was stable, based on data from HundredX.
Goldman slightly lowered its earnings estimates due to softer revenue trends and rising costs.
Adjusted EPS forecasts were revised to $2.57 for 2025, from $2.61, $2.59 for 2026, from $2.67, and $2.80 for 2027, from $2.86.
Revenue estimates were also reduced, with 2025 revenue now projected at $24.98 billion, down from $25.85 billion.