Davenport Downgrades ConAgra Foods (CAG) to Neutral

October 9, 2008 1:14 PM EDT

Davenport downgrades ConAgra Foods Inc. (NYSE: CAG) from Buy to Neutral.

Davenport analyst says, "We are lowering our rating on CAG to Neutral on a growing concern that the food environment is weakening and consumer demand may soften in the near term. We are also concerned about CAG’s ability to improve margins in its Consumer Foods segment at this time due to commodity cost pressures and the lag effect of higher prices. In its latest quarter, CAG delivered 9% sales growth in Consumer Foods with essentially flat volumes. Operating margins were down 150 basis points. We believe the next few months will remain challenging for volume growth as consumers become more selective with purchases. In our opinion, one of the biggest challenges faced by CAG is driving growth from its position as the #3 player in U.S. grocery which does not offer pricing and category management strength."

ConAgra Foods, Inc. (ConAgra Foods) is a packaged food company serving grocery retailers, as well as restaurants and other foodservice establishments.

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