Kraft Heinz (KHC): Trimming Estimates But Still Above Street - RBC
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RBC Capital analyst, David Palmer, reiterated his Outperform rating on shares of Kraft Heinz Company (NASDAQ: KHC) but trimmed EPS estimates to reflect slightly weaker baseline sales trends in the US and higher dairy and coffee prices, partially offset by lower beef and pork prices.
That said, the analyst's estimates remain above consensus in 2017 and 2018 on the belief that the company's cost savings and revenue management programs will continue to deliver rapid margin and EPS growth—and ultimately pave the way to further M&A upside.
2016 and 2017 EPS estimates drop from $3.22, and $3.97 to $3.20 (+46% YOY; cons. $3.23), and $3.94 (+23% YOY; cons. $3.90). The analyst's reduced forecasts reflects 1) a modest deceleration in US scanner trends (base sales down 2.5% in 3Q versus down 2% in 2Q) and 2) higher input costs.
No change to the price target of $96 which is 22.5x 2018 EPSe of $4.27.
Shares of Kraft Heinz Company closed at $88.95 yesterday.
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