Kraft Heinz 4Q Sales Beat Analysts’ Estimates; Shares Pop 5%

Kraft Heinz reported better-than-expected earnings on Feb. 11 driven largely by people staying at home due to pandemic-led lockdowns and ordering more packaged foods.

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Shares of Kraft Heinz (KHC) closed almost 5% higher on Feb. 11 as sales for the fourth quarter rose 6.2% year-on-year to $6.9 billion and increased almost 5% for the year to $26.1 billion.

Earnings per share of $0.80 rose 11% year-on-year and beat analysts’ estimates of $0.73, while revenues of $6.94 billion came in ahead of forecasts of $6.82 billion.

The company expects flat-to positive organic net sales for the first quarter of 2021 and believes that it can carry the positive momentum from the previous quarter into the new year.

Kraft Heinz CEO Miguel Patricio said, “We set our multi-year transformation plan this time last year. We exceeded that plan in 2020. We are increasingly confident that we will again exceed that plan in 2021. We have started the new year with our new operating model fully in place. (See Kraft Heinz stock analysis on TipRanks)

Followong the earnings results, Stifel analyst Christopher Growe reiterated his Hold rating on KHC but raised his price target to $38 from $33 (7% upside potential).

Growe told investors that strong sales and profit growth together with improving cash flows and margins have been a common trend among Kraft Heinz’s peers in the fourth quarter, but warned that sales and EBITDA are likely to be lower in 2021.

Consensus among analysts is a Moderate Buy based on 1 Buy and 2 Holds. The average analyst price target of $36.33 suggests 2% upside potential over the next 12 months.