Conagra Brands' (CAG) fiscal 2027 reset signals a much needed investment alongside a 50% dividend cut, with the trough still ahead as material pricing will not take effect until mid-Q2, RBC Capital Markets said in a note Thursday.

The report said the dividend cut was the right move, as it will free up $335 million of additional discretionary cash per year, with the vast majority directed toward debt repayment.

"The rebase and new CEO plan are a step in the right direction, but this comes down to execution," the note said.

With years of volume declines and strategic clarity not until Investor Day in 2027, a rerating requires Q1 trough confirmation and mid-Q2 pricing traction, the report said.

RBC lowered its price target to $14 from $16 while keeping its sector perform rating on the stock.

Price: 14.40, Change: +0.31, Percent Change: +2.20