Conagra Brands' (CAG) strategic reset addresses long-standing portfolio and investment issues, but investors are likely to need more evidence that the worst is over before the stock can re-rate higher, UBS Securities said.

The brokerage said in a Wednesday note that Conagra's fiscal Q4 adjusted earnings beat was driven largely by below-the-line items and a lower tax rate.

Weaker sales and operating profit, fiscal 2027 guidance below Wall Street expectations and the company's 50% dividend reduction formed part of the broader strategic reset, according to the note.

The investment firm said management is taking steps to restore profitability, simplify the portfolio and increase investment behind core brands and the supply chain. UBS said it is not convinced the company's fiscal 2027 guidance provides sufficient flexibility if category growth, pricing elasticity or inflation prove more challenging than expected.

The brokerage said investors are questioning whether the planned investments will be sufficient and whether the company's initial fiscal 2027 guidance is conservative enough.

UBS maintained its neutral rating on the stock and raised its price target to $14 from $13.

Shares of Conagra Brands were up 2.4% in Thursday afternoon trading.

Price: 14.43, Change: +0.34, Percent Change: +2.38