Kraft Heinz, the Consumer Defensive sector company, was revisited by a Wall Street analyst yesterday. Analyst Alexia Burland Howard from Bernstein maintained a Hold rating on the stock and has a $29.00 price target.
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Alexia Burland Howard has given her Hold rating due to a combination of factors surrounding Kraft Heinz’s strategic considerations. The recent news of a potential company breakup, as reported by the Wall Street Journal, suggests a separation of its faster-growing sauces and condiments business from its slower-growing U.S.-centric grocery segment. This potential restructuring reflects a strategic shift, reminiscent of reversing the original merger of Kraft Foods and The Heinz Company in 2015.
While the prospect of a breakup has led to a modest increase in the stock price, the lack of formal confirmation from Kraft Heinz leaves uncertainty in the air. The analysis indicates that the faster-growing segment could account for approximately 47.5% of companywide sales, yet the international market margins are notably lower than those in North America. This dynamic, along with the current market valuation and growth rates, supports the Hold rating, as the potential benefits of the breakup are balanced by the risks and uncertainties involved.
According to TipRanks, Burland Howard is an analyst with an average return of -1.3% and a 48.33% success rate. Burland Howard covers the Consumer Defensive sector, focusing on stocks such as Tyson Foods, Kraft Heinz, and The Hershey Company.
In another report released yesterday, Wells Fargo also maintained a Hold rating on the stock with a $29.00 price target.