TD Cowen starts coverage of US packaged food makers with caution

Hostess Brands

13/09/2023 11:31

** TD Cowen start coverage of U.S. packaged food companies
with cautious outlook and below-consensus estimates 
    ** Says majority of these companies raised prices too high
on structurally challenged brands and are now facing a downturn 
    ** Says sentiment on food stocks is very different today
than it was a year ago; notes consumers' surprisingly resilient
reaction to higher pricing in 2022 proved unsustainable
    ** Our outlook reflects risk of price discounting, subdued
volume growth, and margin pressure over the next 12 months - TD
Cowen
    ** Brokerage adds Mondelez, Hershey and Lamb Weston will
outperform as among others they have strong pricing power
    ** Notes Kellogg, B&G Foods, Kraft Heinz and Conagra may
have to institute price discounts to revive volumes
             Company                                     
        name              Rating          Price     YTD (last
                                         Target       close)
                                                         
  B&G Foods  BGS.N     Underperform       $10          -1%
   Conagra Brands     Market Perform      $32          -26%
        CAG.N                                      
    Campbell Soup     Market Perform      $45          -25%
        CPB.N                                      
    General Mills     Market Perform      $70          -22%
        GIS.N                                      
   Hershey  HSY.N       Outperform        $250        -10.4%
    Kellogg  K.N      Market Perform      $63         -16.3%
 Kraft Heinz  KHC.O   Market Perform      $35         -17.6%
 Lamb Weston   LW.N     Outperform        $125        +9.2%
      Mondelez          Outperform        $82         +6.7%
    International                                  
       MDLZ.O                                      
 J M Smucker  SJM.N     Outperform        $158         -18%
   Hostess Brands     Market Perform      $34         +49.3%
       TWNK.O                                      
 
 (Reporting by Granth Vanaik in Bengaluru)
 ((Granth.Vanaik@thomsonreuters.com; Twitter: https://twitter.com/Vanaik_Granth;))