ConAgra (CAG) PT Lowered to $16 at UBS on Q3 Earnings Miss, Lowered Guidance

UBS analyst Peter Grom lowered the price target on ConAgra (NYSE: CAG) to $16.00 (from $20.00) while maintaining a Neutral rating.

The analyst commented, "CAG reported a slight miss to 3Q EPS, with stronger top-line growth offset by weaker-than-expected margins and a lower equity contribution from Ardent Mills. FY26 guidance was also narrowed, with organic sales coming in at the midpoint of previous guidance, adjusted OPM at the top end, and EPS of $1.70 at the lower end. Despite the beat on the top-line, shares traded ~flat on the day, with our conversations suggesting that investors were weighing an implied improvement in 4Q on the top/bottom line against management flagging that FY27 will likely face similar challenges to FY26, as the company continues to contend with a dynamic category backdrop and elevated cost headwinds. In our view, we think that the company is currently taking steps in the right direction to try and improve their fundamental trajectory, especially in what remains a challenging environment for Packaged Food (with CAG actually being one of the only PF companies to deliver positive organic growth this quarter). However, the challenge from our standpoint is that tracked trends have yet to shown meaningful improvement to potentially offset the various headwinds the company will be facing in FY27 (lapping of 53rd week, protein inflation, freight, etc.), which could ultimately lead to another year of muted bottom line growth. As such, although valuation remains cheap on both an absolute/relative basis, we require further visibility that there is a path to growth moving forward before stepping in."

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