Latest news with #NikModi
Yahoo
22-07-2025
- Business
- Yahoo
RBC Maintains Neutral View on Conagra (CAG) as Q4 Miss Highlights Growth Pressures
Conagra Brands Inc. (NYSE:CAG) is one of the most oversold S&P 500 stocks so far in 2025. The stock has declined around 30%–32% both YTD and over the past year, largely reflecting broader consumer weakness and persistent inflation, which continue to cloud the outlook for packaged food companies. Investor sentiment took a further hit following the company's Q4 FY 2025 results (fiscal year ended May), released on July 10. The numbers confirmed ongoing softness: net sales dropped 4.3% year-over-year, with organic sales falling 3.5%. While lower volumes were the primary driver of this decline, unfavorable price/mix also played a part. A busy supermarket with shelves full of packaged foods. Margins came under pressure, too. Adjusted operating margin contracted by 100 basis points to 13.8%, contributing to an 8% year-over-year decline in earnings per share, which came in at $0.56. Reacting to the results, RBC Capital's Nik Modi lowered Conagra's price target from $25 to $22, maintaining a Sector Perform rating. In his note to clients, Modi acknowledged the firm's Q4 miss and called attention to a cautious FY 2026 outlook, shaped by ongoing cost inflation and the impact of tariffs. Interestingly, Conagra appears to be leaning into the downturn by continuing to invest in its brands, improving supply chain flexibility, and supporting volume recovery, despite the near-term strain this puts on margins and sentiment. According to Modi, these investments are critical for rebuilding momentum, even if they come at a short-term cost. The market may remain cautious in the near term, but it may stabilize and recover depending on how effectively Conagra navigates these headwinds and how soon its investments begin to yield results. Conagra Brands Inc. (NYSE:CAG) is one of North America's leading branded food companies with a portfolio that includes brands such as Birds Eye, Duncan Hines, Healthy Choice, Marie Callender's, Reddi-wip, and Slim Jim. While we acknowledge the potential of CAG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: Harvard University Stock Portfolio: Top 10 Stock Picks and . Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
19-07-2025
- Business
- Yahoo
RBC Capital maintained a Buy Rating on The Coca-Cola Company (KO)
The Coca-Cola Company (NYSE:KO) is one of the . On July 8, Nik Modi from RBC Capital maintained a Buy rating on The Coca-Cola Company (NYSE:KO) with a price target of $76. The bullish sentiment comes as the company gets close to releasing its second-quarter 2025 earnings results. During the fiscal first quarter of 2025, The Coca-Cola Company (NYSE:KO) grew its Global Unit Case Volume by 2% year-over-year. However, the net revenues declined 2% during the same time due to currency headwinds and the impact of re-franchising the bottling operations. A row of factory workers assembling bottles of sparkling soft drinks on a conveyor belt. The company also provided a full-year and Q2 outlook. Management expects full-year organic revenue to grow between 5% to 6%. Whereas the currency headwinds are expected to continue in Q2, as management expects comparable net revenues to include an approximate 3% currency headwind. The Coca-Cola Company (NYSE:KO) is a global beverage company that produces and sells a wide range of drinks. While we acknowledge the potential of KO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
17-07-2025
- Business
- Yahoo
PepsiCo still has 'a lot of wood to chop': Q2 was 'not good'
PepsiCo (PEP) stock jumps after reporting stronger-than-expected earnings results, driven by international sales amid weakness in North America. RBC Capital Markets managing director Nik Modi joins Market Catalysts to examine the earnings print in the context of the challenging landscape the wider food and beverage industry faces. To watch more expert insights and analysis on the latest market action, check out more Market Catalysts here. PepsiCo rising after topping second-quarter estimates and reiterating its full-year outlook. The maker of Lays and Gatorade citing strong international growth for the results. Joining me now is Nick Modi, RBC Capital Markets managing director. Nick, good to see you here. You got a sector perform on this one, price target of $146. Um, when you look at the volumes here, kind of, kind of lackluster, what do you think is going on with Pepsi? What is your sort of biggest takeaway? Yeah, I mean, look, this has been a general theme that's been going across the entire consumer goods space. Um, grocery inflation has outpaced wage growth, going back to when we got out of the pandemic. And I think that's made groceries literally less affordable in the eyes of the consumer. And so, in those circumstances, a consumer looks for value. Now, when you think about what's happened to a bag of potato chips or Doritos or any other salty snack, uh, for that matter, the prices have gone up quite a bit. Um, or there's product that's come out of the package. And, I think consumers have noticed, and so they're making choices. They're either going to private label, or they're maybe even going to protein forward snacks, just given uh, the rise of the interest in protein as we have an aging population, but also because of GLP1s. So I think all of that is contributing to Pepsi's volume weakness. Um, looks like they're starting to reinvest back into promotions and drive some, some improved volume. Uh, so sequentially it got better from the first quarter, but we still think they have a lot of wood to chop to, to get their, uh, business back to growth. Does the stock price reaction today, that 6% boost, does that make sense to you? Listen, I, the expectations were incredibly low coming into the quarter. Um, and, and that's a function of many other food companies having very disappointing results. General Mills, Smuckers, uh, uh, Conagra, for example. Um, so I think what's happening today is just a reaction to it being not as bad as everyone thought. But let's not kid ourselves, these were not good results uh, in, in an absolute sense. Um, and so we feel very comfortable with our sector perform at this point. And Nick, um, we've seen a lot of changes in the food industry in terms of, of remaking a various conglomerates, right? You know, sort of splitting up, spinning off brands, etc. Is, is that what Pepsi needs to do also? I don't think Pepsi necessarily needs to do that. I mean, I, I think a lot of Pepsi's issues are macro driven. Uh, I think there's some probably some strategic missteps they made around innovation. Um, and I think they need to expand their product portfolio to include other snacking substrates like cauliflower and edamame, uh, but also be more protein forward. So, I don't really think they need to have any massive corporate action um, like you're seeing with some of the other companies in the sector right now. Well, and you mentioned the macro. Um, you know, is it just tough to be in the snack business right now because of those trends, or is it just a matter of they're not leaning into some of the micro trends that, that you alluded to, the sort of quote-unquote healthier snacks or the protein forward snacks? I think it's a little bit of both, right? It's hard to quantify what structural versus cyclical, but I would say the cyclical element is very high uh, because it's not just Pepsi that's struggling. Almost all of my companies uh, across the entire consumer goods landscape are feeling volume pressure right now. Uh, so that's why I believe that this is a, a very big cyclical issue. Um, and so as we start getting into a better, more normalized consumer environment, whenever that comes, uh, I, I certainly think you'll see some volume improvement.
Yahoo
17-07-2025
- Business
- Yahoo
Trump says Coca-Cola will use US sugar: Will this be the new norm?
US President Trump says Coca-Cola (KO) will use cane sugar instead of high fructose corn syrup in its soda, though the company has not confirmed this statement. RBC Capital Markets managing director Nik Modi outlines what the change would mean for the wider food and beverage industry. To watch more expert insights and analysis on the latest market action, check out more Market Catalysts here. We got to talk about then the big elephant in the room, the so-called Maha effect on this industry, right? The make America healthy again, RFK Jr. um effect here. President Trump just saying in a social media post in the last 24 hours that Coca-Cola has agreed to stop using high fructose corn syrup, will transition to cane sugar in its beverages. Um, Coke hasn't confirmed that it's doing that. Do you think this is where the industry is going? What effect is that going to have on margins, for example? Um, well, it it all depends on the the tariff situation, right? One of the reasons why I think sugar was not being used in the US is because it it was a much higher cost of good than high fructose corn syrup. Uh now, interestingly, when you think about quote-unquote Mexican Coke, right? This is the the Coca-Cola that comes from Mexico into the US and the glass bottles, that tends to do very well and and tends to uh sell at a premium. So, you know, I think there's some positive implications if that indeed happens, but it really is going to come down to what what the cost of good situation will look like uh as it relates to buying sugar and importing sugar into the US market. I mean, how big of a change would this be, you know, when you're talking about a reformulation for the, you know, the biggest products here. I mean, and presumably Pepsi would have to follow suit. Yeah, I mean, I I think it's just going to take a little bit of time to kind of get all the supply chains and all the manufacturing we re-equip, but remember, they already make the product. So it's not like they have to reformulate. They already have the formulation. Uh they just have to produce it at scale in the US market. Um, would they have the capacity to switch over American uh manuf because as you mentioned, Mexican Coke, it's in the name. It's Me they important from Mexico. Um, you know, presumably they would still have to import the sugar, right? To your point about the corn is here already. Um, so, you know, what is that how big of a supply chain changeover would are we talking about? Uh I don't think it's it's going to be that abrupt. Uh I think it is very manageable uh for for them and their and their bottlers, uh which also would be part of that process. Um so I I don't think that's really a big issue. Now, when it comes to artificial ingredients and things like that, obviously the entire food and beverage landscape are making adjustments. Um and and that's that's a good thing, right? The reality is no one ever wanted to be first because you don't want some kind of optical disadvantage using a natural dye versus uh an artificial dye for example. But if everyone has to do it, it harmonizes the playing field and brings ubiquity and then I don't really think we'll see much impact as a result. Related Videos Trump Diagnosed with Chronic Venous Insufficiency, White House Says Inside the storefront Beyoncé can't get enough of Novartis CEO on Psoriasis Drug, China Growth, Tariffs, M&A PepsiCo still has 'a lot of wood to chop': Q2 was 'not good' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17-07-2025
- Business
- Yahoo
PepsiCo still has 'a lot of wood to chop': Q2 was 'not good'
PepsiCo (PEP) stock jumps after reporting stronger-than-expected earnings results, driven by international sales amid weakness in North America. RBC Capital Markets managing director Nik Modi joins Market Catalysts to examine the earnings print in the context of the challenging landscape the wider food and beverage industry faces. To watch more expert insights and analysis on the latest market action, check out more Market Catalysts here. Sign in to access your portfolio
