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Why This Kraft Heinz Analyst Sees Room For More Upside After 2-Day Rally

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Why This Kraft Heinz Analyst Sees Room For More Upside After 2-Day Rally

Shares of food giant Kraft Heinz Co (NASDAQ: KHC) are up 10% in two days, marking its fourth-biggest two-day rally in history. Michael Dick, managing director of consumer and retail coverage at Mizuho Securities, offered his take in a Thursday trading report on why the food company is experiencing momentum.

The Kraft Heinz Thesis: Net positioning among funds has trended short/underweight for the entire packaged food group, but the trend has shifted in recent months, Dick said in a note.

Specifically. regulatory 13F filings from the fourth quarter showed funds buying new shares. Most recently, media picked up on Michael Burry's $20-million bet on Kraft through bullish call options, and Dick said this is "catching some eyes."

Manwhile, Kraft's management presented earlier this week at the Consumer Analyst Group of New York (CAGNY) digital event and said financial results are "ahead of plan."

Coupled with the fourth-highest dividend payment among all U.S. staples, better-than-expected earnings last week and attractive terms from the Planters sale, the stock was able to break through the $35 to $36 resistance level, he said.

Related Link: Pepsi, Kraft Might Not Be Meme Stocks But They Offer 'Slow And Steady Growth'

Encouragingly, the stock still has "a lot of open air to the upside," the analyst said. 

Finally, part of the bullish case for Kraft's stock moving forward is based in part on the compensation package given to CEO Miguel Patricio in 2019.

Specifically, the CEO stands to receive 200,000 to 600,000 shares of Kraft's stock if it rises to at least $45 a share.

At that time, a path to $45 per share "felt very aspirational," Dick said.

KHC Price Action: Shares of Kraft Heinz hit a new 52-week high of $39.19 Thursday and ended the session 5.24% higher at $38.96.

Latest Ratings for KHC

DateFirmActionFromTo
Feb 2021JP MorganDowngradesOverweightNeutral
Feb 2021Morgan StanleyMaintainsEqual-Weight
Oct 2020GuggenheimUpgradesNeutralBuy

View More Analyst Ratings for KHC
View the Latest Analyst Ratings

 

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