Zacks Investment Research upgraded shares of ConAgra Foods, Inc. (CAG) from UNDERPERFORM to NEUTRAL on January 08, 2014, with a target price of $36.00.
ConAgra reported improved year-over-year results for the second quarter of fiscal 2014. Adjusted earnings per share were reported at $0.62, up 9% year over year. Revenues in the quarter were $4.7 billion, up 26.5% year over year. The increase was mainly driven by the Ralcorp acquisition. The same trend is expected to continue with the upcoming joint venture of ConAgra – Ardent Mills. The company is also taking steps to reduce its debt in the coming quarters to maintain a healthy balance sheet. Considering these positives, we have upgraded ConAgra from Underperform to Neutral recommendation. However, our upgrade was restricted to a Neutral view due to the loss of an important customer in the Lamb Weston Potato business. Also, ConAgra is exposed to fluctuations in raw materials prices along with supply-demand inconsistency. The presence of many players in the industry has reduced the company's control and increased pricing pressure.
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