On Wednesday, Citi adjusted its outlook on Kraft Heinz Company (NASDAQ:KHC) stock, lowering the price target to $39.00 from the previous $41.00, while maintaining a Buy rating on the stock. The revision comes ahead of the company's anticipated fiscal third-quarter results, set to be released on October 30, 2024.
The firm anticipates that Kraft Heinz's third-quarter sales may fall short of the consensus estimates, with earnings per share (EPS) expected to align with predictions. According to the analyst, Kraft Heinz's annual guidance suggests a gradual improvement in sales, and the company might reaffirm its 2024 guidance, albeit with a caution that the lower end of its forecast ranges could be more probable.
Kraft Heinz, noted for its value in the market, is currently considered the most affordable food stock in terms of both forward price-to-earnings (P/E) and enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratios. Despite this, the analyst conveyed a cautious stance in the near term due to persistently weak sales trends.
The company's stock performance and valuation will be closely watched as the market anticipates the upcoming earnings report, which will provide further insight into Kraft Heinz's financial health and its potential trajectory in the face of ongoing sales challenges.
In other recent news, Kraft Heinz Company has reported significant financial developments, including a nearly $100 million increase in free cash flow compared to the previous year. The company also returned over $1.5 billion to shareholders through dividends and share repurchases. Kraft Heinz has extended the maturity date of its $4.0 billion revolving credit facility to July 8, 2029, providing increased financial flexibility.
Piper Sandler maintained an Overweight rating on Kraft Heinz, citing the company's recent investments in its Foodservice division and the introduction of new dispensers as potential growth drivers.
However, Goldman Sachs (NYSE:GS) assigned a Sell rating, citing significant challenges that may prolong the company's recovery, while TD (TSX:TD) Cowen maintained a Hold rating, acknowledging the potential for a turnaround despite ongoing challenges.
In other company developments, Rashida La Lande, Executive Vice President and Chief Legal and Corporate Affairs Officer, has announced her immediate departure from Kraft Heinz. She will continue as an advisor during a transition period to complete certain strategic projects.
The company's strategy for the latter half of the year includes renovating and innovating products, increasing marketing spend, and improving targeting strategies. These are recent developments for Kraft Heinz.
InvestingPro Insights
As we approach Kraft Heinz's upcoming earnings report, InvestingPro data offers additional context to Citi's analysis. The company's current P/E ratio stands at 21.93, while its adjusted P/E ratio for the last twelve months is 12.84, reflecting the value proposition highlighted in the article. This aligns with Citi's observation of Kraft Heinz being the most affordable food stock in terms of forward P/E.
InvestingPro Tips suggest that analysts predict Kraft Heinz will be profitable this year, which could support Citi's maintained Buy rating despite the lowered price target. Additionally, the company has been profitable over the last twelve months, with a revenue of $26.32 billion USD and an EBITDA of $6.49 billion USD for the same period.
Investors might also consider Kraft Heinz's attractive dividend yield of 4.62%, which could provide some cushion against the cautious near-term outlook mentioned in the article. For those seeking a deeper understanding of Kraft Heinz's financial position, InvestingPro offers 13 additional tips that could further inform investment decisions.
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