WK Kellogg Co: Sell Rating Due to Financial Outlook Challenges and Margin Pressures

Bank of America Securities analyst Peter Galbo has reiterated their bearish stance on KLG stock, giving a Sell rating yesterday.

Peter Galbo has given his Sell rating due to a combination of factors impacting WK Kellogg Co’s financial outlook. The company reported a slight improvement in adjusted EBITDA for the first quarter of 2025, but this was offset by lower organic sales volumes and gross margin pressures. Additionally, WK Kellogg Co revised its full-year 2025 financial outlook, lowering its adjusted EBITDA expectations, which now suggests a flat year-over-year margin expansion.
Despite ongoing supply chain initiatives, there is skepticism about the company’s ability to achieve its long-term margin expansion target by the end of fiscal year 2026. The expectation of a flat gross margin for 2025 and anticipated pressure in the second quarter further contribute to concerns. The company’s organic sales are projected to decline, and while there are efforts to improve volumes, the outlook remains challenging. Consequently, the price objective has been lowered to $15, reinforcing the Underperform rating.

In another report released yesterday, Barclays also maintained a Sell rating on the stock with a $16.00 price target.