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Investing.com - BofA Securities reiterated an Underperform rating and $15 price target on ConAgra Brands (NYSE:CAG) following the company’s leadership announcement.
ConAgra announced Monday that John Brase has been named incoming President and CEO effective June 1, succeeding Sean Connelly who will be stepping away from the company. Brase previously served as COO of SJM and held senior roles at PG.
BofA Securities views the timing of the announcement as a surprise. The firm noted that ConAgra has faced significant challenges over the past several years which could have accelerated the timing.
The firm identified key tasks for Brase including addressing ConAgra’s inflation outlook which affected EPS in fiscal year 2026 and poses a risk to EPS growth in fiscal year 2027. BofA also pointed to the dividend, with a payout ratio above 80% versus a target of 50-55% given current leverage of 3.8x net debt to EBITDA. The stock currently offers a 9.2% dividend yield and trades near its 52-week low of $15.04, down 37% over the past year. According to InvestingPro analysis, ConAgra appears undervalued at current levels, with the company having maintained dividend payments for 51 consecutive years—one of several key insights available to subscribers.
BofA suggested potential balance sheet de-leverage through asset sales, mentioning Hebrew National and Odom’s Tennessee Pride as brands discussed in the past.
In other recent news, Conagra Brands announced that John Brase will become President and Chief Executive Officer effective June 1, 2026, succeeding Sean Connolly. This leadership transition comes after Connolly’s decade-long tenure, with Brase also joining the company’s Board of Directors. In the financial realm, Conagra reported a slight miss on its third-quarter earnings per share, with a figure of $0.39, which is $0.01 below the consensus estimate. Despite stronger top-line growth, the company faced weaker-than-expected margins and a lower equity contribution from Ardent Mills, leading to a narrowed fiscal 2026 guidance.
UBS responded by lowering its price target for Conagra to $16 from $20, citing margin pressure and concerns for fiscal year 2027, while maintaining a Neutral rating. Similarly, Stifel cut its price target to $17 from $19, reiterating a Hold rating on the stock. Conagra’s organic sales grew by 2.4%, driven by a 0.5% increase in volume and a 1.9% contribution from price and mix. These developments reflect ongoing adjustments and evaluations by analysts in light of the company’s recent performance and leadership changes.
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