Bernstein analyst Alexia Burland Howard has maintained their neutral stance on K stock, giving a Hold rating on June 30.
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Alexia Burland Howard’s rating is based on a combination of factors, primarily revolving around the ongoing European Commission investigation into the proposed merger between Kellanova and Mars. The investigation raises concerns about the potential increase in bargaining power of the joint entity, which could affect pricing negotiations with retailers. Although the overlap between Kellanova and Mars in specific food categories is minimal, the presence of larger competitors with more dominant brands in the market adds complexity to the situation.
Another consideration is the potential outcomes of the investigation, which could involve Kellanova having to divest certain assets like Pringles or its cereal portfolio in key European markets such as Germany and France. These markets represent a significant portion of Kellanova’s global sales. Additionally, if the deal is rejected, there is a substantial downside risk to Kellanova’s stock price, which could drop significantly. Given these uncertainties and potential risks, Alexia Burland Howard has opted for a Hold rating, reflecting a cautious stance until more clarity is obtained.
In another report released on June 30, TD Cowen also maintained a Hold rating on the stock with a $83.50 price target.