Kraft Heinz Co (NASDAQ:KHC, ETR:KHNZ) has been downgraded to ‘Underperform’ by analysts at Bank of America after the packaged foods firm’s initial 2025 outlook disappointed.
They also lowered their price objective on the stock to $30 from $36. Shares of Kraft Heinz traded hands at about $29 on Thursday afternoon.
The bank’s analysts wrote in a note to client that their previous ‘Buy’ rating was predicated on a stronger topline and impressive processes on margins.
“Downgrading Kraft Heinz shares on the lows is not heroic, but we struggle to see a path forward to meaningful organic sales improvement over the next 12 months,” they wrote.
“Unlike food peers who have reset EPS expectations with their initial fiscal year 2025 outlooks this earnings season, Kraft Heinz continues to have a revenue problem. If packaged food industry volumes normalize, we also see Kraft Heinz as a laggard given portfolio composition.”
Analysts added that they remain constructive on the company's potential sale of its hot dog brand Oscar Mayer.
“While a sale for Kraft Heinz still likely makes sense given drag to organic sales, Kraft Heinz took a $1.4 billion brand impairment in 4Q ($2.2 billion total in 2024)," they wrote.
"The overhang in the deli category from a competitor issue front and muted peer valuations may make a sale less impactful."