UBS says that increasing inflation is affecting many household products, including Kraft Heinz. The stock was downgraded by analyst Cody Ross to a sell rating. Ross cited inflation risk and the possibility of competition for private label products in a letter to clients on Thursday. Ross said that KHC was facing the greatest inflationary pressures for the next twelve months. It will make them more likely to have to raise prices again this year. “In addition to this, the company has cut back on promotions. It competes with categories that have higher trade down risks and poses the most risk for consumer trade to down to private label. Ross predicts that organic growth will be slower than expected in 2023 due to these constraints. Also, adjusted EBITDA of $5.9 Billion is projected by the bank for 2023. That’s lower than the Street’s expectation of $6.1 Billion. While shares in the food and beverages company rose 10% last year, they have seen a 7.4% drop this month. UBS has reduced its target price for the stock from $40 to $34 per share. The difference is 13.9% from Wednesday’s close. Ross stated that KHC believes it will prove difficult to implement additional pricing in the next year. KHC would likely struggle with trade pressure when consumers are tightening their budgets. — CNBC’s Michael Bloom contributed reporting
