Is Kraft Heinz's Organic Sales In The Right Direction? This Analyst Doesn't Think So And Downgrades Stock

Core Viewpoint - BofA Securities analyst Peter T. Galbo downgraded Kraft Heinz Co (KHC) from Buy to Underperform, lowering the price forecast from $36.00 to $30.00 due to limited organic sales growth anticipated in the next 12 months [1]. Financial Performance - KHC is facing revenue challenges, unlike peers such as Hershey Co and Mondelez International Inc, which have adjusted their EPS forecasts for FY25 [2]. - The analyst revised the 2025-2026E EPS estimates down from $2.97 and $3.13 to $2.65 and $2.70, respectively, with a new 2027E EPS forecast of $2.75 [3]. Strategic Initiatives - Progress on KHC's two highest-priority platforms, "Accelerate" and "Protect," has been disappointing, impacting organic sales growth [3]. - The "Accelerate" initiatives, which represent about two-thirds of global sales, have slowed significantly, particularly in categories like condiments, Mac & Cheese, and Lunchables, with challenges expected to persist until at least the second half of 2025 [4]. Revenue Growth Prospects - Any positive revenue growth in 2025 is likely to stem from KHC's lower-priority "Balance" platform, primarily through coffee price increases, which are not viewed as a strong solution [5]. - The company recorded a $1.4 billion impairment on the Oscar Mayer brand in the fourth quarter, which may impact organic sales [5]. Market Valuation - The analyst's $30 price forecast is based on an 11x P/E multiple (down from 12x) on the CY26 EPS estimate [6]. - KHC shares were trading higher by 0.90% at $28.88 at the last check [6].