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UBS maintains Neutral on Kraft Heinz shares due to slow organic sales

EditorEmilio Ghigini
Published 02/14/2024, 08:23 AM
Updated 02/14/2024, 08:23 AM
© Reuters.

On Wednesday, UBS reaffirmed its Neutral rating on Kraft Heinz Company (NASDAQ:KHC) with a steady price target of $39.00. The latest earnings report from Kraft Heinz revealed organic sales that fell below market expectations, and while gross margin performance was strong, the total operating profit and EBITDA did not meet the consensus. The company's forward-looking guidance suggested sales and earnings per share that were in line with analyst predictions, although expectations for growth appear to be weighted towards the latter half of the year.

The food industry giant's financial results for the fourth quarter have been perceived as somewhat underwhelming by investors, given the anticipation for a potential guidance on fiscal year 2024 earnings per share that would surpass analyst expectations. However, the performance of Kraft Heinz's shares in recent months had raised concerns that the results might not meet the heightened expectations, leading to a more subdued response to the report.

Kraft Heinz's guidance indicates that while the company's projections for sales and earnings are on par with what analysts anticipated, the assumption of stronger growth in the second half of the year could be seen as optimistic given the current market conditions. This outlook is likely to be a focal point during the company's earnings call, with investors seeking clarity on the visibility of top-line growth and the level of prudence in the company's forecasts.

The market's reaction to Kraft Heinz's financial disclosure and future outlook has been muted, with indications of a slight decline in share price by approximately 1%. The investor call is expected to delve into these aspects, with a particular emphasis on the company's revenue prospects and the potential conservatism of its financial projections.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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