Conagra Brands (CAG) appears to have limited capability to mitigate incremental cost inflation and foreign exchange headwinds in H2 of fiscal 2025, RBC Capital Markets said in a Friday note.

"We continue to believe that packaged food names like CAG remain in a tough spot amid ongoing consumer pressures," RBC analysts, including Nik Modi, said.

"We do not yet see sufficient evidence that this will abate meaningfully in the near term, though we are encouraged that action is being taken."

The analysts now expect fiscal 2025 organic sales to decline 0.7% instead of their prior forecast of a 1% drop, taking into account the fiscal Q2 topline beat and updated guidance. However, they lowered its EPS estimate to $2.46 from $2.60, "reflecting the more meaningful F2H cost inflation and FX headwind."

RBC kept its sector perform rating on the stock and $29 price target.

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