TLDR
- Kraft Heinz announces split into Global Taste Elevation Co. and North American Grocery Co.
- Stock dropped 7% on September 2 following split announcement
- Morgan Stanley upgrades from Sell to Hold with $29 price target
- Analysts express concerns about growth potential for both new companies
- KHC trades near 52-week low, down 15% year-to-date
Kraft Heinz stock captured investor attention after announcing plans to separate into two independent companies. The move aims to create more streamlined operations for each business unit.
Kraft Heinz will split into two listed companies, one focused on groceries and the other on sauces and spreads, the U.S. packaged foods maker said on Tuesday, seeking to jump-start growth after years of sluggish sales.
The move dismantles the decade-old merger between H.J. Heinz… pic.twitter.com/NDH6oHaBTx
— USA TODAY (@USATODAY) September 2, 2025
The food company will divide into Global Taste Elevation Co. and North American Grocery Co. Global Taste Elevation will manage sauces, spreads, and seasonings. North American Grocery will handle grocery staples across North America.
Shares tumbled nearly 7% on September 2 when the split news emerged. The initial reaction showed investor skepticism about the restructuring plan.
Morgan Stanley Shifts Stance
Morgan Stanley analyst Megan Alexander moved KHC from Sell to Hold rating. She increased the price target to $29 from $28, indicating 11.5% potential upside.
Alexander explained that her previous bearish outlook has “largely played out.” Current earnings estimates now appear more realistic after recent revisions.
The analyst still expects earnings per share pressure in fiscal 2026. Higher input costs and continued reinvestment needs will likely weigh on results.
Mizuho Securities maintained its Hold rating with a $29 target. Analyst John Baumgartner said the split “likely strengthens the floor under the stock.”
Jefferies analyst Scott Marks kept his Hold rating at $28. He questioned the “true growth and margin potential for both new companies.”
Financial Performance and Market Position
KHC currently trades at $26.02, close to its 52-week low of $25.44. The stock has fallen 15% this year compared to a 7% decline in the broader food sector.
Second quarter results beat expectations with earnings of $0.69 per share versus $0.64 expected. Revenue reached $6.35 billion, topping the $6.25 billion forecast.
The company offers a 6.15% dividend yield. This provides income while investors await potential improvement.
Global Taste Elevation will focus on emerging markets and foodservice segments. These areas represent about 40% of total sales after separation.
Warren Buffett expressed disappointment with the split decision. The plan reverses the merger he supported nearly ten years ago.
Moody’s placed company ratings under review for potential downgrade. The review covers Baa2 senior unsecured ratings and Prime-2 commercial paper ratings.
Recent scanner data shows early signs of performance stabilization. Morgan Stanley believes the second quarter marked the bottom for organic sales growth.
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