KeyBanc Maintains Sector Weight Rating on ConAgra (CAG)
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Rating Summary:
5 Buy, 19 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 13 | New: 17
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KeyBanc maintained a Sector Weight rating on ConAgra (NYSE: CAG). Comments follow release of the company's Q4 results and an announcement that it plans to exit private label brand operations. Analyst Akshay S. Jagdale said likely buyers of its Private label business are Treehouse Foods (NYSE: THS) and Post Holdings (NYSE: POST).
Commenting on developments, Jagdale said, "We applaud management’s relatively swift decision making on its portfolio strategy (i.e., selling Private Brands). However, we are concerned that the opportunity to reduce costs in the Consumer and Commercial segments is not robust enough (in part due to the significant progress to date) to support sustainable growth. Under the previous management team, CAG’s Consumer business generated over ~$2B in cost savings, or 3% of COGS, which is at the high end of its peer group. Also, the previous management had already implemented a portfolio segmentation strategy for the Consumer segment several years back. As such, we would like to see the Company significantly prune its Consumer business for us to get more excited about its growth prospects."
"Likely buyers on the public side for the Private Label business are considered to be THS and POST. CAG’s Private Label business from a category perspective has most overlap with GIS, KRFT and K, all of whom should benefit from the business disruption during the sale process," added the analyst.
For an analyst ratings summary and ratings history on ConAgra click here. For more ratings news on ConAgra click here.
Shares of ConAgra closed at $43.43 yesterday.
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