Morgan Stanley Cuts Kraft Heinz Price Target to $23, Trims Earnings 18%
Morgan Stanley lowered Kraft Heinz’s price recommendation to $23 from $24 and cut FY26 and FY27 earnings estimates by 18% to reflect higher planned investments. Kraft Heinz paused its planned corporate split, increased 2026 capital spending to about $950 million and earmarked $600 million for marketing and research, projecting $300 million in savings.
1. Price Target and Earnings Revisions
Morgan Stanley lowered its price recommendation on Kraft Heinz to $23 from $24 and maintained an Underweight rating, reflecting limited visibility into a turnaround. The firm also slashed FY26 and FY27 earnings forecasts by 18% to account for higher investment needs as revenue growth remains pressured.
2. Capital Spending Increase
Kraft Heinz plans to raise capital expenditures to about $950 million in 2026, up from the prior year, as part of a shift to strengthen operations. CEO Steve Cahillane paused the proposed corporate split to focus resources on core business challenges, signaling confidence in a fixable turnaround.
3. Split Pause and Cost Savings
The halt of the split is expected to generate roughly $300 million in savings during 2026 by avoiding separation costs. The original plan, introduced in September, would have created separate grocery and sauces-and-spreads entities following a decade-long merger-driven growth plateau.
4. Marketing and Research Investment
Rather than splitting, Kraft Heinz earmarked $600 million for marketing and research initiatives aimed at reviving stagnant demand, particularly in the U.S. market. This investment underscores a strategic pivot toward brand-building efforts to drive revenue growth.