UPDATE: Citigroup Initiates Kraft Foods Group at Neutral on Valuation

Citigroup initiated coverage on Kraft Foods Group

with a Neutral rating and $48 price target. Citigroup said, "Kraft Foods Group (Kraft), the ~$19B North American grocery spin-off of Kraft Foods Inc. (Old Kraft), independently represents the 4th largest player in N.A. food and beverage. We believe that over the long term Kraft can achieve sales growth of +2%-3% and EPS growth of +7%-9%, as Kraft is presented with the opportunity to grow in several well-positioned categories, improve margins under intense management focus, and effectively re-invest savings back into new product innovation and marketing to drive the virtuous cycle. While Kraft's post-split opportunity for margin expansion is attractive, valuation upside appears limited in our view and is the basis for our Neutral rating." Kraft Foods Group closed at $44.10 on Monday.