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Kraft Heinz Slashes Output At Three Plants, Boosts Packaged Food Production

Kraft Heinz’s (KHC) CEO Miguel Patricio has announced that the company has slashed production at three plants providing restaurant supplies, as consumer behavior shifts in response to the coronavirus outbreak. “These facilities have significantly reduced production” he said.  

“Operations in China are returning to normal now, but… consumers’ behavior has changed, as individuals are using more home deliveries” Patricio told investors.   

However, there was a positive takeaway from the presentation as well. According to Patricio, KHC has now boosted output at its packaged food units to meet the demand for macaroni and cheese in the US, and canned beans and soups in the UK.

Overall, analysts are recommending that investors stay on the sidelines when it comes to KHC stock. According to TipRanks, KHC has a Hold analyst consensus rating with an average analyst price target of $28 (9% upside potential). (See KHC’s stock analysis on TipRanks)

On the bullish side, JP Morgan’s Kenneth Goldman recently ‘tactically’ upgraded KHC from hold to buy, with a price target of $29. Goldman explained: “Though we continue to have a number of structural, longer-term concerns about Kraft Heinz’s portfolio and margin profile, we think investors should own retail-centric packaged food companies with higher levels of debt right now.”

He continued: “Leverage works both ways, and during relatively good times – which COVID-19 currently brings to US food producers’ revenues – higher debt loads likely will disproportionately reward the bottom lines of companies that rely on it.”

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