Hold Rating on Kellanova Amid Acquisition Uncertainty and Weakening Earnings Prospects

Thomas Palmer, an analyst from Citi, maintained the Hold rating on Kellanova (K – Research Report). The associated price target is $83.50.

Thomas Palmer has given his Hold rating due to a combination of factors impacting Kellanova’s current and future performance. The rating reflects the uncertainty surrounding a pending acquisition, which, if not completed, could lead to a significant decline in the stock’s value. This is particularly concerning given the company’s recent struggles with sales and margin pressures, as well as its valuation being lower than historical averages for similar large-cap US food companies.
Additionally, Palmer’s analysis indicates that Kellanova’s earnings prospects have weakened, as evidenced by the company’s recent earnings per share missing consensus estimates and a decline in organic sales growth. The stock’s current valuation does not align with its fundamentals, primarily due to the anticipated acquisition. Considering these factors, Palmer suggests that the stock might be appropriately valued in the low to mid-$50s range, justifying the Hold rating.

In another report released on May 15, Bernstein also assigned a Hold rating to the stock with a $83.00 price target.