On Tuesday, Jefferies maintained a Hold rating on ConAgra (NYSE:CAG), but increased the shares target to $30 from $27. The firm noted that ConAgra's U.S. retail sales continue to show a low single-digit percentage decline.
The company has been facing challenges in growing its top line due to consumer behavior shifting towards value-seeking and channel shifting, which has particularly affected its business in grocery and convenience channels.
ConAgra has been attempting to improve volume in its Refrigerated & Frozen (R&F) segment through higher pricing investments, yet this strategy has not fully offset the volume declines in its Grocery & Snacks (G&S) segment, which has not seen significant price investments.
The firm underlined the difficulties ConAgra is experiencing as it tries to navigate the current market environment, emphasizing the need for the company to strike a more effective balance in its growth strategy. Despite the challenges, the firm sees some potential in ConAgra's stock, as reflected in the upward adjustment of the price target.
The updated price target of $30 represents a modest increase from the previous target of $27, indicating a level of caution from Jefferies in light of the ongoing issues ConAgra faces. The Hold rating suggests that the firm advises investors to maintain their positions in the stock without further buying or selling at this time.
In summary, ConAgra's performance in the U.S. retail market remains under pressure, with the company working to find a more successful approach to pricing and volume across its product segments. The revised price target from Jefferies reflects a careful optimism about the company's ability to adjust and potentially improve its market standing.
In other recent news, ConAgra Brands has been the subject of several significant developments. In anticipation of the company's first-quarter earnings report, Citi raised its price target on ConAgra shares from $30 to $33 while maintaining a neutral rating. The company is expected to deliver earnings in line with market expectations.
Analysts from Goldman Sachs, Stifel, and RBC Capital have also expressed their views on ConAgra, with Goldman Sachs initiating coverage with a Buy rating and Stifel and RBC Capital revising their price targets following the company's recent financial performance.
ConAgra has also been active in corporate governance, with shareholders approving an amendment for officer exculpation and electing eleven nominees to serve as directors. However, the named executive officer compensation was not approved, suggesting potential concerns over executive pay practices.
The company has also expanded its product portfolio with the acquisition of Sweetwood Smoke & Co., the maker of FATTY Smoked Meat Sticks. This move aligns with ConAgra's strategic focus on convenient and health-conscious options. For fiscal year 2025, the company projects a range of -1.5% to flat growth for organic net sales and an adjusted EPS of $2.60 to $2.65. These are recent developments that have shaped the company's trajectory.
InvestingPro Insights
In light of Jefferies' recent assessment of ConAgra, it's worth noting that the company has a strong history of shareholder returns, as highlighted by InvestingPro Tips. ConAgra has not only raised its dividend for four consecutive years, but it has also maintained dividend payments for an impressive 49 consecutive years. Additionally, analysts remain optimistic about ConAgra's profitability, predicting net income growth this year and a profitable outcome over the last twelve months. These factors suggest a resilient financial position that could support the company's strategy to navigate through the current market challenges.
InvestingPro Data further illustrates a mixed financial picture. ConAgra's market capitalization stands at $15.48 billion, with a high earnings multiple reflected by a P/E ratio of 44.46. However, the adjusted P/E ratio for the last twelve months as of Q4 2024 shows a more favorable figure at 13.33. Moreover, the company's dividend yield as of the same period is an attractive 4.33%, coupled with a dividend growth of 6.06%. These metrics, along with a price that is currently trading near its 52-week high at 97.2% of the peak, could offer investors a sense of stability and potential for income generation.
For those interested in a deeper analysis, there are additional InvestingPro Tips available, providing a comprehensive understanding of ConAgra's financial health and future prospects. To explore these insights, visit InvestingPro for ConAgra at https://www.investing.com/pro/CAG.
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