Investing.com -- Citi downgraded Kraft Heinz (NASDAQ:KHC) to Sell ahead of its first-quarter 2025 earnings, citing risks to organic sales growth and potential margin pressures.

“We see risk to organic sales growth,” analyst at Citi research said.

“KHC’s measured takeaway growth continues to struggle, driven by share losses. And other channels and geographies, could face sales pressure, as well”

Citi expressed concern that Kraft Heinz may need to lower its margin structure to drive volume growth, as it did in 2019.

The brokerage noted that Kraft Heinz is experiencing share losses across key product categories, with measured U.S. takeaway growth among the weakest in its coverage.

It also highlighted pressures from foodservice and international markets, including Canada.

“This continued sales weakness could pressure earnings,” analyst added

It pointed to recent margin resets at U.S. food peers Conagra and General Mills (NYSE:GIS), which have increased spending on promotions, pricing adjustments, and marketing.

Lowering its estimates, Citi cut its 2025 earnings forecast for Kraft Heinz to $2.63 per share from $2.68 and its 2026 forecast to $2.69 from $2.76.

It also reduced its price target to $27 from $28, reflecting a 12% downside before factoring in the company’s 5% dividend yield.

The bank projects Kraft Heinz’s organic sales to decline 4.8% in the first quarter, below the Visible consensus estimate of a 4.0% decline.

It expects earnings per share of $0.61, in line with consensus, while noting that the company has missed sales estimates for seven consecutive quarters but has not posted an earnings miss since the fourth quarter of 2018.

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