Kraft Heinz Analyst Projects Gross Margin Inflection Ahead, Says Company Now Structurally Better Positioned

While Kraft Heinz Co KHC is well positioned to benefit from improving market dynamics and is among the few Consumer Staples stocks that do not already reflect the potential upside, according to Goldman Sachs.

The Kraft Heinz Analyst: Jason English upgraded the rating on Kraft Heinz from Neutral to Buy, while keeping the price target unchanged at $43.

The Kraft Heinz Thesis: The company is now structurally better positioned than it was a few years ago, “with reduced private label exposure and lowered leverage levels,” English said in the upgrade note.

Check out other analyst stock ratings.

The recent trends “indicate strong pricing led sales growth for the company, with resilient volumes, as private label and promotional intensity remains subdued on the back of still challenged labor situation across the broader CPG landscape,” the analyst wrote.

“Importantly, we expect cost pressure to ease going forward, which along with building price momentum should drive a price-cost surplus well into FY23 and drive gross margin inflection ahead,” he added.

Benzinga data finds four analysts currently have a Buy rating on Kraft Heinz.

Meanwhile, Goldman Sachs downgraded consumer goods giant Procter & Gamble Co PG from a Buy rating to a Neutral rating. Shares of P&G are down 0.49% to $123.66 on Monday. The downgrade was based on concerns over the stock's valuation and challenges to the company's market share.

KHC Price Action: Shares of Kraft Heinz had risen by 3.03% to $34.03 at the time of publication Monday.

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