Bernstein analysts upgraded shares of J. M. Smucker (SJM) to Market Perform and Kraft Heinz (NASDAQ:KHC) to Outperform in a note to clients on Tuesday.
Analysts told investors in a note that companies with greater GLP-1 exposure and worsening Nielsen data have performed the worst within their coverage year-to-date.
However, Kraft Heinz, which has a price target of $40 at Bernstein, was raised due to its "cheap valuation, fair relative positioning in a GLP-1 world given its protein-forward portfolio in the U.S., and an improved business model implemented under Mr. Miguel Patricio," said the analysts.
"With its multiple at an all-time low and a portfolio that is better positioned relative to peers in a GLP-1 world, we see the risk-reward as attractive over the next 12 months," they added.
SJM, which was assigned a price target of $119 per share, was raised "primarily due to its cheap valuation as the stock is down -32% YTD."
This has led to a more balanced risk-reward for investors, said the analysts, adding that SJM's portfolio looked fairly benign to GLP-1 concerns, but its exposure has increased post the Hostess acquisition, "which has exhibited worsening volume trends in recent months."
"This was a poorly timed acquisition that is likely value destructive for investors but is likely reflected in today's current stock price," they stated.