Conagra Brands (CAG) will likely report "soft" fiscal Q4 results due to ongoing pressure on consumer demand for packaged food, while volume weakness continues to weigh on sales despite some sequential improvement in market share and velocity, RBC Capital Markets said in an earnings preview Tuesday.
RBC analysts said they expect organic sales to be under pressure at least through H1 as the company faces headwinds, including divestitures, and inflation in protein costs and imported materials like tinplate steel and aluminum. The firm also said it believes Conagra will issue a full-year organic sales guidance range of down 1% to up 1%.
RBC said Conagra's management is considering selective price increases if inflation persists, but pricing discussions with retailers remain tough due to a volatile cost environment, limiting its flexibility to protect margins.
The packaged food company is due to report Q4 results Thursday.
RBC has a sector perform rating on the company's stock with a $25 price target.
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