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It is time to purchase Conagra because it catches as much as its rivals, in line with UBS. Analyst Cody Ross upgraded shares of Conagra to purchase from impartial. He mentioned the inventory is lagging its friends even because the packaged meals firm alerts a greater earnings development trajectory forward. “We consider CAG is within the early innings of a optimistic estimate revision cycle pushed by: (1) sturdy momentum within the Nielsen scanner knowledge YTD, (2) is likely one of the few corporations in our protection that’s rising each vol share and HH penetration suggesting the well being of its portfolio is bettering, and (3) rising B/S optionality that ought to present further levers to develop EPS at a 6% CAGR over the subsequent three yrs (vs Road’s 5% estimate),” Ross wrote in a Friday notice. “Regardless of these tailwinds, CAG’s inventory is lagging lg cap packaged meals friends this yr (+2.6% vs lg cap friends +14.3%) and is buying and selling at a 20% low cost to lg cap packaged meals friends in comparison with its 5-yr avg of 11% (EV/EBITDA),” he added. The analyst raised his 12-month value goal to $41 from $35. The brand new goal implies roughly 17% upside from Thursday’s shut of $34.94. Shares of Conagra popped 2.6% in Friday premarket buying and selling. The maker of Hunts and Chef Boyardee merchandise has fallen behind the competitors because it struggled to satisfy its personal steerage lately, in line with the notice. Shares of Conagra are up 2.3% in 2022, whereas shares of friends similar to Common Mills and Kellogg have jumped greater than 18% and eight% this yr, respectively. Nonetheless, the analyst expects that Conagra will probably be on “extra agency footing to develop in step with its classes transferring ahead,” given the corporate’s current investments into product improvements. “We consider this is likely one of the few lg cap packaged meals shares that has stable visibility to earnings upside and anticipate the inventory will re-rate to its historic stage relative to the group in time,” he added. —CNBC’s Michael Bloom contributed to this report.
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