Dive Brief:
- ConAgra's recent overhaul, combined with potential moves in the near future, could send the company's stock price surging by about 30%, according to a recent Barron's report.
- Since joining ConAgra in April 2015, CEO Sean Connolly has overseen several major changes. These include the sale of ConAgra's private-label brands business, a potential spinoff of Lamb Weston, significant job cuts, the announcement of $300 million in cost savings over the next three years, and most recently the sale of Spicetec — all of which have encouraged investors and analysts, Barron's reported.
- Thanks to Connolly's history of turning around Hillshire Brands, ConAgra's potential sale of Lamb Weston, and a renewed focus on consumer brands, these experts are predicting these stock price targets for ConAgra for the next year or two.
Dive Insight:
At Hillshire, Connolly made a bid for Pinnacle Foods, though that deal fell through with Tyson's bid for Hillshire. In the end, Hillshire sold itself to Tyson for $7.7 billion — a 70% premium.
Connolly has demonstrated his appetite for acquisitive growth, and he oversaw ConAgra's purchase of better-for-you frozen foods producer Blake's All Natural Foods last year, which expanded the company's natural and organic foods segment. Growth through acquisitions is what made ConAgra the major food industry contender it is today, but after reaching an unsustainable and unprofitable size, the company shifted to leaner gears under Connolly.
Connolly could be preparing ConAgra for a sale itself, as he did for Hillshire. While ConAgra has become increasingly focused on its consumer brands portfolio, that portfolio lacks "power brands," a Technomic exec told the Omaha World-Herald last year. A successful transformation still may not be enough for ConAgra to grow to the size of competitors like General Mills or Kraft Heinz, so shareholders may push for a sale at that point anyway — potentially to one of those competitors.
If ConAgra does decide to retain its ownership, experts have speculated that the company could continue slimming down by divesting underperforming brands, Barron's reported. If so, a company like B&G Foods may be in the market. It has a successful track record for acquiring and turning around underperforming brands like Green Giant, which it acquired from General Mills late last year.