Jeffries analysts struck a cautious tone regarding Kraft Heinz Co (NASDAQ:KHC, ETR:KHNZ), given what they consider to be the company’s persistent retail sales and volume softness, a weak consumer spending environment, and uncertainty around its pending split into two entities.
In a note to clients, the analysts wrote they “remain on the sidelines,” while reducing their target price on Kraft Heinz stock by 5% to $24 per share with a ‘Hold’ rating.
They also point to the continuing decline of the company’s core brands, questioning Kraft Heinz’s efforts to spend more on marketing and innovation rather than implement price reductions.
In early September, the company announced it would split into two entities: Taste Elevation and North American Grocery Co.
The analysts believe questions have persisted around the rationale and outlook for the separate entities, and they are also concerned about the company’s inability to divest its struggling Oscar Mayer brand.
They added that visibility on growth prospects for Taste Elevation and stability for North American Grocery Co remains limited.
Kraft Heinz shares rose 1.2% to $25.44 in late-morning trading on Friday.