Kraft Heinz is unduly maligned, near-term upside is meaningful - BofA
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Kraft Heinz (NASDAQ:KHC) gets a worse rap than it deserves, according to Bank of America analyst Bryan Spillane.

In a note to clients on Thursday, the analyst advised that the stockâs recent selloff and associated negative sentiment surrounding the stock are overdone. While Spillane acknowledged that execution at the company has been challenged in recent years, it is actually well-positioned at present.

Spillane rebutted key arguments about inflation pressure, private label exposure, and read through from major retailers specifically. He pointed to automation initiatives, pricing actions, and partnerships with retailers as important insulating factors amid inflation. For private label exposure, he noted Kraft Heinz (KHC) is âin the middle of the pack relative to peersâ and that orderly price competition is anticipated even in commoditized categories where Kraft Heinz (KHC) has maintained market share.

Finally, Spillane suggested that Kraft Heinz (KHC) was unfairly punished for disappointing results at consumer staples purveyors like Walmart (WMT). 

âFollowing [Walmart] (WMT) results in mid-May, consumer staple stocks took a turn and weakened due to a reaction from commentary on price increases pressuring households to trade down to private label,â he noted. âIn our view, KHC is most insulated from this news as they were the fastest to raise price versus other companies in our coverage universe that potentially need to take another round of meaningful price increases.â

After an over 15% drop in share price over the past month, Spillane advised Kraft is offering an attractive entry point. He maintained his âBuyâ rating on shares and $48 price target.

âIn our view, the market is fitting a narrative that is incorrect,â he concluded. As such we see meaningful upside to KHC shares over the next 12 months as [Kraft Heinz] (KHC) simply meets its targets.â
Read UBSâ conversely bearish expectations for the stock.