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My Kraft Share Price Target: Analyst

Wednesday, 4 Nov 2009 | 3:25 PM ET

Kraft’s third quarter profit beat Wall Street expectations, but the company posted weaker-than-expected revenue and cut its full-year sales forecast on Tuesday. Timothy Ramey, vice president and senior research analyst at D.A. Davidson & Co. shared his analysis on the firm’s earnings.

Kraft Earnings Analysis
Timothy Ramey, analyst at D. A. Davidson & Co., shares his analysis of Kraft's earnings results.

“The market is really hoping that Kraft shows some signs of organic growth, and organic growth was only up a half a percent this quarter, so it stalled out,” Ramey told CNBC. “[It] certainly had great margin expansion, but the topline was pretty anemic.”

Ramey has a “buy” rating on Kraft and has a $33 price target in the next 12 to 18 months. His 5-year price target for the company is $45.

“I did maintain the buy—I don’t feel it’s a very high conviction buy, but the stock is cheap,” he said. “It has a 4 percent dividend yield.”

The world’s second largest food company also announced on Tuesday that it will not overpay for Britain’s Cadbury.

“Paradoxically, this announcement makes it less likely that [Kraft] will go out and do something ill-advised on Cadbury,” he said.

More Market Intelligence:

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CNBC's Companies in the News:

ConAgra Foods

HJ Heinz

Campbell Soup

General Mills

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Disclosures:

Ramey has investment clients who own shares of Kraft.

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Disclaimer

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