Morgan Stanley Reiterates Overweight Rating, $44 PT on Kraft Foods

In a report published Wednesday, Morgan Stanley reiterated its Overweight rating and $44.00 price target on Kraft Foods

. Morgan Stanley noted, “In an email to Reuters last night, Kraft confirmed the WSJ's report yesterday that it has reached an agreement to sell a 75% stake in the Back to Nature product line (including cookies, crackers, granola, nut/trail mix, and dry dinners) to a private equity partner who will subsequently manage the business. Kraft said in its email that it will hold a ‘substantial' minority stake in Back to Nature and the WSJ article stated that Kraft Foods will continue to sell the brand's line of organic macaroni and cheese products (a potential hedge against organic competitors in dry dinners), while the minority stake in the remaining brands will accrue to Mondelez. Terms of the deal were undisclosed, but – given the brand's modest size ($50-75mm, per the report) – we would expect minimal impact on earnings and/or cash flow.” Kraft Foods closed on Tuesday at $41.11.