JPMorgan downgrades Konagra and upgrades Harmel, as inflation risks have to be put on the side of investors in many large food companies.

JPMorgan analysts have upgraded Konagra Brands Inc. and Hermel Foods Corporation, with analysts saying that all major food companies have “limited long-term growth potential” in the same neutral stock rating category.

Analysts at Konagra CAG wrote, “The rationale for staying neutral across the board is simple: we don’t see enough difference in long-term prospects.”
Downgrade published on Friday. JP Morgan downgraded his rating from Overweight, and lowered his price target from $ 41 to $ 38 in Konagra.

Hermel HRL,
+ 0.85%
The price target was maintained at $ 42.

Analysts write, “Over time, this will likely change as unique opportunities emerge, but for now we see reasonably similar stories ahead: strong top lines associated with soft total margins.” “These names work best in our experience, when investors generally fear and want security; Inflation tends to get worse when it comes to food safe packaging.

Views: Weight gain during Covid-1, especially among young consumers, is changing the way Americans eat and wear.

Konagra Financial reported sales declines in the first quarter, but lost analyst expectations.

Hermel was developed from low weight based on evaluation, acquisition of planters and “Turkey Basics”.
In the .. 3.355 billion deal announced earlier this year.

Turkish brand Jenny-Oo is part of the Hermel portfolio. Over the past few years, the company has been plagued by oversupply, ground turkey competition, Covid-1 and feed cost inflation.

JPMorgan says the cost for the whole bird, which is part of the Jenny-O lineup, is strong and will probably be reflected in the 2022 financial results.

JP Morgan is even more excited about Kraft Heinz and Kellogg Co.,
In this large-cap food-producing class, though Kellogg workers are now on strike and there may be more labor problems for this class.

Also: Workers at Kellogg’s U.S. cereal plant go on strike

JPMorgan, on the other hand, is keen on food producers saying it has the potential to sell more like Lamb Weston Holdings Inc.
Which missed an earnings on Thursday and warned of serious margins and Oatly Group AB OTLY,
Which has been upgraded from JPMorgan neutral to overweight. JPMorgan has a লক্ষ্য 21 price target for Oatly.

The biggest problem facing Konagra and many other companies is inflation.

“[W]e Anxiety [cost of goods sold] Inflation is getting worse – not just for Conagra, but for most of our companies – and our management teams are not necessarily cushioning enough, ”said JPMorgan.

Conagra stock has declined 7% to date for the year. Shares of Harmel are down 10.6%. And benchmark S&P 500 Index SPX,
Gained 16.9% for the period.

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