Citigroup Bearish On Food Companies, Downgrades Six Names

David Driscoll of Citigroup on Monday downgraded six food manufacturing companies as Nielsen data suggests a continuation of substantial U.S. food volume declines in 2015. “Critically, we see no broad-based evidence in our most recent food, retail scanner data that suggest any optimism, as U.S. food volumes remain in decline,” Driscoll wrote. The analyst adds that declining oil prices will positively affect both consumer spending power and lowering manufacturing costs, but these positives may already be already priced in. Here is a summary of the analyst's downgrades:

• Shares of ConAgra Foods CAG were downgraded from Buy to Neutral with an unchanged $39 price target following cautious comments by the company's management indicating it was having trouble re-establishing its private label business with certain retailers.
• Shares of Mondelez International MDLZ were downgraded from Buy to Neutral with a price target lowered to $41 from a previous $43 as the company has “heavy” exposure to international markets that are struggling.
• Shares of Kellogg K were downgraded from Buy to Neutral with a price target lowered to $71 from a previous $73 given the company's “still very weak” fundamentals along with foreign exchange headwinds.
• Shares of McCormick & Co MKC were downgraded from Neutral to Sell with a price target lowered to $70 from a previous $74 as the company continues to fail on delivering its long-term growth algorithm over the past two years.
• Shares of Kraft Foods Group KRFT were downgraded to Sell from Neutral with an unchanged $61 price target as shares are overvalued trading at 20x 2014E earnings per share.
• Shares of Campbell Soup CPB were downgraded to Sell from Neutral as the company's ongoing shift to areas outside of soup that have better growth profiles will take a long time to come to fruition.