The firm raised its rating on ConAgra to "overweight" from "neutral" citing an attractive risk/reward profile following the activist stake by JANA Partners.
JPMorgan also hiked its price target for shares to $52 from $39, saying it is confident the company will undergo changes.
Omaha-based ConAgra Foods is a packaged food company that provides branded and private branded foods in households, commercial foods businesses, and foodservice operations.
The company's brands include Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew National, Hunt's, Marie Callender's, Orville Redenbacher's, PAM, Peter Pan, Reddi-wip, Slim Jim and Snack Pack.
CongAra Foods products are sold in grocery, convenience, mass merchandise, club, and drug stores.
Separately, TheStreet Ratings team rates CONAGRA FOODS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CONAGRA FOODS INC (CAG) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, CAG's share price has jumped by 28.38%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.9%. Since the same quarter one year prior, revenues slightly dropped by 1.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- CONAGRA FOODS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CONAGRA FOODS INC reported lower earnings of $0.54 versus $1.87 in the prior year. This year, the market expects an improvement in earnings ($2.17 versus $0.54).
- The gross profit margin for CONAGRA FOODS INC is currently lower than what is desirable, coming in at 25.02%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -24.61% is significantly below that of the industry average.
- Net operating cash flow has decreased to $322.80 million or 16.50% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: CAG Ratings Report