Jefferies has adjusted its outlook on Kraft Heinz Company (NASDAQ:KHC) shares, lowering the price target to $34 from $35 while maintaining a Hold rating. The revision comes ahead of the company's second-quarter results, with a noted 3% decline in U.S. retail sales across various Kraft Heinz brands like Lunchables, Kraft, and Oscar Mayer.
The analyst from Jefferies expressed concerns about the company's extensive brand portfolio potentially hindering reinvestment focus. Market conditions, including softness in quick-service restaurant (QSR) and foodservice traffic, could further challenge Kraft Heinz's North American business.
Jefferies has revised growth and EPS estimates for Kraft Heinz in 2024, suggesting potential divestments to streamline operations. The updated price target and Hold rating reflect Jefferies' view on navigating retail sales pressures and industry trends.
InvestingPro Insights
As Kraft Heinz (KHC) prepares for its second-quarter financial results, key metrics reveal a market capitalization of $39.88 billion and a P/E ratio of 14.27. The adjusted P/E ratio for the last twelve months stands at 11.3, indicating a low earnings multiple. The PEG ratio of 0.83 suggests potential undervaluation considering earnings growth.
Despite downward earnings revisions, Kraft Heinz is expected to remain profitable, trading at a low P/E ratio relative to growth potential. Value investors may find interest in the stock. For more in-depth financial and strategic insights, InvestingPro offers additional guidance with a special promotion using the coupon code PRONEWS24 for up to 10% off a yearly Pro or Pro+ subscription.
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Analysis: Jefferies' price target cut on Kraft Heinz reflects concerns over declining retail sales and industry challenges, prompting potential divestments for operational efficiency. Kraft Heinz's financial metrics indicate possible undervaluation, offering opportunities for value investors seeking long-term gains.