Conagra Brands (CAG) Stock Forecast & Price Target

Conagra Brands has demonstrated notable improvements in operating margins, with international operating margins increasing by 170 basis points due to strategic divestitures and grocery and snacks margins rising by 60 basis points, aided by insurance proceeds from a past recall. The company has shown a consistent positive trend in volume and market share, with 67% of its portfolio maintaining or gaining volume share over the last quarter, marking the fifth consecutive quarter of share gains. Finally, management anticipates ongoing topline momentum in the second half of fiscal 2024, supported by improvements across key segments such as Grocery & Snacks, Refrigerated & Frozen, and Foodservice, despite facing some inflationary pressures.

Conagra Brands has revised its operating margin outlook down to 14.8%, the lowest projected for fiscal year 2024, primarily due to higher-than-expected inflation, which has been increased to 4%, and a $0.04 foreign exchange headwind. In addition, the company has reported a significant decline in Swiss Miss volumes by 18% year-over-year, attributed to rising cocoa prices and delayed winter weather, which are expected to negatively impact gross margins in fiscal year 2025 by 90 basis points compared to the previous year. Overall, organic sales declined by 3.5%, and the company has lowered its FY'25 organic sales outlook to -0.1%, further influenced by an 11.1% drop in foodservice volumes from weakness in quick-service restaurant dining and the exit from lower-margin businesses.