Kraft Heinz: Bank of America Cuts Valuation on Spinoff

Kraft Heinz: Bank of America Cuts Valuation on Spinoff

Kraft Heinz (KHC-Q)

Bank of America lowered its 12 month target price on Kraft Heinz to $27 from $29 after the company unveiled plans to separate into two independent, publicly traded businesses through a tax-free spinoff. One company will focus exclusively on Kraft Heinz’s condiments and sauces portfolio, which includes Heinz Ketchup and other high-margin global brands, while the other will center on its groceries and packaged foods division, such as Kraft Mac & Cheese and Oscar Mayer.

The move is designed to unlock value by allowing each business to pursue tailored growth strategies, improve capital allocation, and sharpen operational focus. Analysts believe the sauces division could benefit from stronger international growth prospects and brand power, while the grocery unit may face more competitive pressures in the mature packaged foods space.

Bank of America’s s target cut reflects uncertainty around the execution of the separation and the potential near-term costs of restructuring, but the firm noted that the breakup could ultimately create shareholder value if it leads to higher profitability and stronger multiples for the sauces business.

Stock Forecast

Kraft Heinz currently has a consensus analyst rating of “Hold”, reflecting as most analysts see the company as fairly valued, with limited upside catalysts, particularly as it undergoes a major restructuring that will split it into two independent, publicly traded companies.

Across Wall Street, the 12-month average price target for Kraft Heinz sits around $29.50 per share, with estimates ranging from a low of about $27 to a high of $35.

Investor sentiment remains mixed, as some see the move as a bold restructuring step to revive growth after years of sluggish sales, while others worry that the grocery segment could struggle as a standalone entity in a highly competitive consumer environment.

In summary, analysts remain cautious on Kraft Heinz. While its restructuring efforts could unlock long-term value, the consensus outlook points to a period of limited growth, with the stock expected to trade near current levels over the coming year.

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