The Kraft Heinz (NASDAQ:KHC) continued its winning streak for the seventh consecutive day, with the ketchup maker rising ~3.30% Tuesday afternoon to reach $38.21.
KHC has gained ~3.40% during a course of 6 days to close at $36.98 on Friday.
The stock has lost 6.11% of its value in 1-year time, but saw a bounce back in the last 6 months, having gained 9.01%.
The main reason for the sharp increase in share price has been linked to a flurry of sell-side analysts who rushed to upgrade the stock. The upgrades have gravitated around Kraft Heinz valuation, market share and improving efficiency.
However, free cash flow upside for 2024 remains limited and this limits any potential upside from current levels, according to Seeking Alpha analyst Vladimir Dimitrov.
Topline growth is also likely to continue on its downward trajectory over the coming months which creates additional risks for shareholders, Dimitrov said.
Notably, consumer staples sector saw a subdued performance in 2023, with Consumer Staples Select Sector SPDR Fund ETF down 3.06% during the year as compared to a decrease of 2.8% in 2022.
SA contributor Albert Anthony, who gives KHC a Hold rating, said the company’s share price is trading above average, earnings growth is not exceptional and dividend growth over 10 years is not competitive.
Anthony’s rating aligns with SA’s Quant Rating of Hold. But SA authors and the Wall Street analysts give the stock a Buy rating.
BTIG analyst Jonathan Krinsky added KHC among a few names in the sector that could yield better results.
Meanwhile, Wells Fargo thinks the food sector has the potential to be one of the top performers within the Staples category in 2024, and the sector volume is forecasted to turn positive in Q2. The firm, however, stayed cautious on Kraft Heinz with Equal-weight ratings.