Shares in Kraft Heinz Company (KHC) were tastier today despite fears that government moves to promote healthy eating could leave its recent carve-up looking like a dog’s dinner.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Earlier this month the consumer staples giant announced that its Board of Directors had approved a plan to split the company into two independent, publicly traded companies through a tax-free spin-off.
Too Little, Too Late?
The Global Taste Elevation Co. will focus on sauces, spreads, and seasonings, while the North American Grocery Co. will sell grocery staples in North America.
Kraft Heinz has been struggling in recent years due to weak demand for some of its core products, including Lunchables, Capri Sun, macaroni and cheese, and mayonnaise. The company has been focusing on reshuffling its portfolio and investing in healthier products.
However, analysts fear that the move may not be enough to revive its brands.
The rise of the “Make America Healthy Again” (MAHA) movement led by U.S. Health Secretary Robert F Kennedy Jr, who blames artificial ingredients for chronic childhood diseases like diabetes and obesity, poses a new threat for the company famous for its Ketchup and cheese slices.
According to a Reuters article, former employees said the business had missed opportunities to reduce preservatives and artificial ingredients but were unconvinced that the costly change would boost sales.
Food Regulation
That’s important because the MAHA commission released a report this week calling for the U.S. government to review chemical additives in packaged products and define ultra-processed foods. Adding to the pressure, legislators in California, the largest U.S. state by population, are voting on a bill that would regulate ultra-processed foods as soon as this month.
Nicholas Fereday, an independent food industry analyst, said the prospects for Kraft Heinz after a split are still bleak. “The very fact they’re splitting up doesn’t change any of it and explain how they’re going to inject energy, excitement and clarity” into the company, he said.
Kraft Heinz, however, told Reuters that it focused on providing nutritious and affordable food, and has reduced its use of sugar, overhauled over 1,000 recipes and committed to removing synthetic dyes from its U.S. brands.
Is KHC a Good Stock to Buy Now?
On TipRanks, KHC has a Hold consensus based on 15 Hold and 1 Sell ratings. Its highest price target is $30. KHC stock’s consensus price target is $28.19, implying a 5.54% upside.
See more KHC analyst ratings
