It is time to buy Conagra because it catches as much as its rivals, in response to UBS. Analyst Cody Ross upgraded shares of Conagra to purchase from neutral. He said the stock is lagging its peers at the same time as the packaged food company signals a greater earnings growth trajectory ahead. “We consider CAG is within the early innings of a positive estimate revision cycle driven by: (1) strong momentum within the Nielsen scanner data YTD, (2) is considered one of the few corporations in our coverage that’s growing each vol share and HH penetration suggesting the health of its portfolio is improving, and (3) increasing B/S optionality that ought to provide additional levers to grow EPS at a 6% CAGR over the following three yrs (vs Street’s 5% estimate),” Ross wrote in a Friday note. “Despite these tailwinds, CAG’s stock is lagging lg cap packaged food peers this 12 months (+2.6% vs lg cap peers +14.3%) and is trading at a 20% discount to lg cap packaged food peers in comparison with its 5-yr avg of 11% (EV/EBITDA),” he added. The analyst raised his 12-month price goal to $41 from $35. The brand new goal implies roughly 17% upside from Thursday’s close of $34.94. Shares of Conagra popped 2.6% in Friday premarket trading. The maker of Hunts and Chef Boyardee products has fallen behind the competition because it struggled to satisfy its own guidance in recent times, in response to the note. Shares of Conagra are up 2.3% in 2022, while shares of peers akin to General Mills and Kellogg have jumped greater than 18% and eight% this 12 months, respectively. Still, the analyst expects that Conagra will likely be on “more firm footing to grow in keeping with its categories moving forward,” given the corporate’s recent investments into product innovations. “We consider that is considered one of the few lg cap packaged food stocks that has solid visibility to earnings upside and anticipate the stock will re-rate to its historical level relative to the group in time,” he added. —CNBC’s Michael Bloom contributed to this report.
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