Conagra Brands (CAG) is expected to post fiscal Q1 results roughly in line with guidance, but faces rising freight costs and a challenging consumer environment, RBC Capital Markets said in an earnings preview Friday.

The investment firm expects Q1 organic sales to decline by a low-single-digit percentage, roughly in line with management's guidance.

Q1 also faces a 50 bps headwind from the trade expense timing benefit that supported the corresponding quarter a year earlier, alongside modest pressure in Foodservice and International, analysts wrote.

The company is scheduled to report its fiscal Q1 results Wednesday.

Rising diesel costs create incremental exposure amid elevated cost inflation, but the company is effectively trying to pass through inflation in a consumer environment that remains value-conscious, according to the note.

The company's fiscal 2027 guidance can be maintained, but cost pressures driven by freight and logistics pose the biggest incremental headwind, according to the note.

RBC has a sector perform rating on the stock, with a $14 price target.

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