Weight-Loss Drugs Vs. Conagra Foods: Company Optimistic Amid Shifting Consumer Demands Influenced By Hunger Suppressing

At the Consumer Analyst Group of New York Conference in Boca Raton, Florida, Conagra Brands Inc CAG Executive Tom McGough addressed concerns about potential sales declines for U.S. food companies due to the increased use of weight-loss drugs.

Contrary to apprehensions, McGough expressed optimism, stating that Conagra sees an “opportunity” to expand its market by offering frozen meals, meat snacks, and popcorn tailored to individuals using these medications.

Investors have expressed worry over the impact of weight-loss drugs, such as Novo Nordisk A/S’s NVO Ozempic and Wegovy, on U.S. food companies, fearing a decline in sales as these drugs suppress appetite and induce feelings of fullness. 

In response to this concern, Reuters highlighted that McGough reassured stakeholders that, if anything, Conagra envisions potential growth within its product portfolio.

McGough supported his optimistic outlook with data from market research firm Numerator, indicating an 8% increase in the consumption of “better-for-you” frozen meals among individuals using weight-loss drugs. 

He further anticipated heightened interest in Conagra’s snacks, such as Slim Jim beef jerky and Angie’s Boomchickapop popcorn, from users of the weight-loss medications known as “GLP-1 agonists.”

Conagra’s competitors, including The Kraft Heinz Company KHC and Kellanova Co K, may also face inquiries from Wall Street analysts regarding the potential impact of these drugs on their sales. 

However, McGough’s positive stance aligns with the broader trend, as General Mills Inc GIS CEO Jeffrey Harmening emphasized at the conference, Reuters noted. 

Harmening highlighted his company’s commitment to meeting evolving consumer weight management and nutrition needs by introducing new products, such as Annie’s Macaroni & Cheese’s “Super Mac,” offering higher protein content and a protein-forward Progresso soup line.

In a proactive approach, General Mills is also addressing consumer preferences for lower sugar options, extending this initiative to their Betty Crocker cakes, cookies, and brownies.

CAG Stock Prediction 2024

When buying a stock for a longer time horizon, it is important for investors to assess where they think the stock is headed in the future.

When mapping a stock's future trajectory, investors should consider factors including the future earnings expectations and expected performance against a benchmark.

Conagra Brands revenue has grown at an average rate of 3.79% annually over the past 5 years. The average 1-year price target from analysts is $31.0, representing an expected 9.1% upside in 2025.

While past performance is not a guarantee of future results, investors should also look at a stock's historical performance when compared to both a benchmark index and the company's peers. Shares of Conagra Brands have seen an annualized return of -2.48%, underperforming the S&P500 index by 11.16%. This compares to 7.15% growth in the overall Consumer Staples sector. Conagra Brands has a beta of 0.9.

Price Action: CAG shares are trading higher by 0.56% at $28.64 on the last check Wednesday.

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