Peter Galbo, an analyst from Bank of America Securities, maintained the Hold rating on Conagra Brands (CAG – Research Report). The associated price target remains the same with $27.00.
Peter Galbo has given his Hold rating due to a combination of factors surrounding Conagra Brands’ recent strategic decisions and financial outlook. The company announced the sale of its Chef Boyardee brand for $600 million, which is expected to be slightly dilutive to earnings per share. This move aligns with Conagra’s strategy to reshape its portfolio by divesting non-core, low-growth assets and focusing on acquiring faster-growing businesses.
Despite the potential for gross margin expansion as pricing offsets cost inflation, the company’s elevated leverage compared to its peers and higher portfolio elasticity contribute to the Hold rating. The price objective of $27 is based on a valuation multiple that is below that of its center-store peers, reflecting these financial dynamics. Overall, while the sale aids in debt reduction and aligns with long-term goals, the current financial metrics suggest a cautious approach, justifying the Hold recommendation.
Galbo covers the Consumer Defensive sector, focusing on stocks such as General Mills, McCormick & Company, and The Hershey Company. According to TipRanks, Galbo has an average return of 0.3% and a 47.62% success rate on recommended stocks.
In another report released on April 22, TD Cowen also maintained a Hold rating on the stock with a $23.00 price target.