Zacks Investment Research downgraded shares of ConAgra Foods, Inc. (CAG) from OUTPERFORM to NEUTRAL on April 30, 2013, with a target price of $37.00.
We are downgrading our recommendation on ConAgra from Outperform to Neutral based on the lower than expected results of the company. ConAgra's earnings per share in fiscal third quarter 2013 were reported at $0.55, lagging the Zacks Consensus Estimate of $0.57. Also, revenue of $3,850.5 million lagged the Zacks Consensus Estimate of $3,869.0 million. Although revenue from both the Commercial Foods and Consumer Foods increased year over year, operating profit for the latter declined in the quarter. ConAgra's recent acquisition of Ralcorp is expected to contribute roughly $0.05 and $0.25 earnings per share in fiscal 2013 and fiscal 2014, respectively. Moreover, subject to approvals, Ardent Mills, expected to start operations in the latter half of the calendar year 2013 is also likely to contribute significantly to ConAgra's earnings. However, ConAgra is involved in plenty of promotional activities which raise the total expenditures for the company. Also, stiff competition and the prevailing inflation, though less severe than before, remain a nagging concern.
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