In 2019, Kraft Heinz seemingly couldn’t do anything right. In 2020, the shares are up more than 10%, well above the broader market, and Piper Sandler expects even more gains. It’s the pandemic.
Analyst Michael Lavery boosted his rating on Kraft Heinz (ticker: KHC) to Overweight from Neutral, and added $9 to his price target, to $39. He believes that “greater food at home trends [will] drive a sustainable lift at least into 2021, and Kraft Heinz is well-positioned with a largely meal-oriented portfolio with modest food-service exposure.”
As previous stories have noted, more people are experimenting with and liking cooking at home during the Covid-19 pandemic, and while that isn’t the only thing helping Kraft Heinz stock, it does appear to be a longer-term tailwind at a time when Kraft is working to right past mistakes.
Lavery notes that the company has only about 15% exposure to restaurants, a benefit over some other packaged-food stocks that have seen that source of revenue shrink during the pandemic. In addition, the business Kraft Heinz does get from this sector is skewed to fast-food restaurants, which are performing better than other segments of the industry, given their low price points and focus on takeout and delivery.