Kraft Heinz Co (NASDAQ:KHC, ETR:KHNZ) may be facing a long-term recovery after underwhelming against revenue expectations over the third quarter, but analysts at Barclays are urging patience.
Net sales fell by 2.8% to $6.38 billion over the three months to September, the ketchup maker reported on Wednesday, undershooting estimates for $6.43 billion.
Barclays analysts highlighted that Kraft Heinz did not foresee reaching a steady growth trajectory, or "on-algorithm pace," throughout 2025—a forecast that may have disappointed some who anticipated a quicker recovery.
“KHC’s comments around 2025 underlined this thinking,” analysts wrote in a note.
Kraft Heinz's domestic market, particularly US Retail, continued to struggle while its Emerging Markets and Away from Home segments showed growth momentum.
The analysts applauded Kraft Heinz's shift to more sustainable, long-term brand building, especially with well-known brands like Lunchables, which faced increased competition and short-term supply chain disruptions.
“Historically, KHC had been less patient with innovation, and this was now changing,” Barclays wrote.
They viewed the company’s patience as a welcome shift, allowing new products to gain market traction gradually, with a ‘fail fast’ strategy reserved for innovations that didn’t resonate with consumers.
Kraft Heinz balanced promotional spending with long-term profitability by focusing on strategic pricing rather than triggering a “race to the bottom.”
“To us, this did not suggest a race to the bottom,” the analysts noted, observing that the company’s spending strategy aimed for sustainable volume growth without undercutting its brand value.
The productivity gains—running ahead of the industry average—gave Kraft Heinz some leeway to explore promotional activities without compromising margins.
Following these updates, Barclays adjusted its price target for Kraft Heinz, lowering it slightly from $36 to $35, particularly for North America’s performance in 4Q24, which was expected to show further challenges.