Street View: Kraft Heinz's acknowledgment of slow volume recovery 'optimistic'
** Kraft Heinz KHC.O slashed its organic sales forecast for 2024 on Wednesday, signaling subdued demand for its branded snacks and Lunchables meal kits, but maintained its profit expectations
** At least six brokerages raised PT on the stock after results; median PT is $38
PRODUCTIVITY SAVINGS PROP UP STOCK
** BofA ("buy", PT:$40) views revised midpoint of new FY24 sales outlook as "optimistic"
** Adds "KHC's self-help initiatives and more conservative approach set up shares to outperform peers simply by executing well"
** TD Cowen ("hold", PT:$36) notes despite opportunities for more cost savings, "we are concerned that they may get absorbed by additional price investments to stabilize North America's stubbornly low share"
** Jefferies ("hold", PT:$34) says management has been somewhat delayed in its price investment strategy given ongoing volume declines across its portfolio, share loss to other brands/private label, and wide price gaps
** "Additional promotional spend/more narrow price gaps supposedly coming in H2" - analyst Rob Dickerson
** Morningstar analyst Erin Lash believes KHC is unlikely to prioritize near-term volume and market share at the expense of the long-term health of the business
Reporting by Savyata Mishra in Bengaluru
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