Conagra Seeing Solid Topline Momentum, but Limited 2027 EPS Visibility to Constrain Stock, Morgan Stanley Says

MT Newswires Live04-02

Conagra Brands (CAG) is seeing solid topline momentum and near-term execution, but limited visibility into meaningful earnings growth in 2027 could constrain the stock, Morgan Stanley said in a research report emailed Thursday.

The company's topline momentum is supported by volume and market share recovery, but underlying trends remain relatively muted amid uncertainty around elevated input costs, further complicated by commodity volatility after recent geopolitical developments, analysts wrote.

The brokerage highlighted that margin expansion is highly dependent on input cost inflation and also cut its fiscal 2027 earnings estimates by 3% to $1.76 per share.

Q4 gross margins are expected to fall at a rate similar to Q3, reflecting inflation pressure and absorption headwinds from ongoing inventory reduction, analysts said. For Q4, the brokerage expects adjusted EPS of $0.45 compared with $0.48 earlier.

The brokerage said it reiterated its equalweight rating on the stock and cut its price target to $17 per share from $19.

Price: 15.37, Change: -0.15, Percent Change: -1.00

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