A Downgrade That Demands Attention: BofA Turns Bearish on Conagra Brands

Conagra Brands (CAG), a pillar in the North American packaged foods sector, has just been hit with a notable analyst downgrade. On June 12, 2025, BofA Securities shifted their outlook from Neutral to Underperform, slashing their price target to $20—a stark warning to investors in a company known for household staples like Healthy Choice, Marie Callender’s, and Slim Jim. Analyst downgrades from top-tier banks can signal more than just a price adjustment—they often reflect deepening skepticism about a company’s short- to medium-term prospects, and in this case, could point to sector headwinds, competitive threats, or internal challenges.

Key Takeaways:

• Potential Downside: With CAG trading at $22.11, BofA’s $20 target implies a potential downside of roughly 9.5% from current levels.

• Stock Price Weakness: The stock just notched its lowest 12-month price, and has trended downward, with 127 down days out of the last 248.

• Recent News: Conagra has announced a wave of new frozen food launches, the divestiture of non-core brands, and an upcoming Q4 earnings release—signaling both innovation and restructuring.

• Volume and Volatility: Trading volumes are at their lowest in a year; volatility remains moderate, but technical indicators (RSI near 45) indicate lingering investor indecision.

• Analyst Weight: BofA Securities is a leading voice in consumer staples coverage, and their Underperform signals a shift in large-cap food sector sentiment.

The Downgrade in Context: Analyst and Firm Perspective

Why BofA’s Call Matters

BofA Securities, as one of Wall Street’s most influential research houses, commands respect for its sector expertise and institutional reach. Their downgrade on Conagra comes at a pivotal time. The $20 price target—now well below both the current price and 20-day moving averages—reflects a meaningful skepticism about Conagra’s ability to grow earnings or defend margin in the near term. BofA’s food sector analysts have repeatedly demonstrated prescient calls on changing consumption, cost inflation, and competitive dynamics across packaged foods. Their Underperform call, especially after a period of relative neutrality, should be read as a clear red flag in their risk outlook for CAG.

Analyst Confidence & Background

BofA’s large-cap consumer staples desk is known for rigorous modeling and a conservative approach to cyclical shifts. Their move stands out amid an industry where many peers have maintained Hold or Buy ratings, and adds further caution to the food sector’s mixed outlook. The downgrade aligns with recent stock underperformance and signals deepening concerns about pricing power, cost inflation, or strategic execution.

Conagra’s Position: Financials and Recent Performance

Stock Price and Technicals

Over the last year, Conagra’s shares have slid from a high of $33.24 to a recent low of $21.92, closing at $22.11 ahead of the downgrade. Technical signals are neutral-to-weak: the 20-day EMA and SMA hover above the current price, and Bollinger Bands suggest the stock is hugging its lower boundary. The RSI of 45 reflects a market undecided—neither oversold nor showing strength.

• Sentiment Ratio: 121 up days, 127 down days over the past year, underscoring persistent bearishness.

• Average Daily Volume: 5.48 million shares, but recent days have seen the lowest volumes in a year—often a precursor to either capitulation or a potential reversal.

Financial Health and Trends

While detailed financials for the most recent quarter aren’t yet available (with Q4/FY25 results pending July 10), the business has been in a transition phase. Recent divestitures (Van de Kamp’s and Mrs. Paul’s brands) and a broad push into new frozen food SKUs reflect a strategic pivot toward higher-growth and margin-accretive segments. However, the market appears unconvinced that these moves will offset competitive pressures and cost headwinds in the near term.

• Portfolio Reshaping: The divestiture for $55 million underscores Conagra’s focus on core brands and operational streamlining.

• Innovation Cycle: Over 50 new frozen food items launching this month signal a bet on product innovation to reignite top-line growth.

What’s Behind the Downgrade?

Competitive and Sector Headwinds

The packaged foods sector, while defensive, is facing headwinds: input cost inflation, changing consumer preferences, and private label competition. Conagra’s ability to pass through higher costs or win share in frozen and shelf-stable categories is under scrutiny. BofA’s move likely reflects:

• Ongoing margin compression from commodity and labor inflation

• Uncertainty about the success of new product launches

• Concerns about organic volume growth, especially as competitors ramp up promotional activity

“Divestiture supports Conagra’s efforts to reshape its portfolio.”
— PRNewsWire, June 6, 2025

Recent News: Innovation, Earnings, and Restructuring

• Product Innovation: Conagra is rolling out over 50 new frozen SKUs, a move to capture incremental share and respond to evolving consumer tastes. While bold, execution risk is high, and distribution gains will be closely watched.

• Portfolio Management: The sale of Van de Kamp’s and Mrs. Paul’s signals a clear commitment to focusing on higher-performing brands, but also highlights potential softness in legacy businesses.

• Earnings Watch: With Q4 results due July 10, investors face a near-term catalyst. Any further disappointment could validate BofA’s cautious stance.

Downside Risk: Quantifying the Analyst’s Warning

At $22.11, Conagra trades about 9.5% above BofA’s freshly cut price target. This potential downside is notable in a sector where annual returns tend to be modest and volatility is lower than the broader market. Further price erosion could dilute the appeal of Conagra’s dividend, and signal a need to reconsider weighting in consumer staples.

Sector and Peer Dynamics: Why This Matters for All Food Stocks

Conagra’s downgrade is part of a broader recalibration across staples, as investors weigh sticky inflation against slowing volume growth. If BofA’s thesis proves correct, similar names with stretched valuations or lagging innovation may also come under pressure. Monitor upcoming earnings and further analyst actions for signals of a sector-wide de-risking.

Expert Opinions and Investor Takeaways

“We’re excited to bring more than 50 new foods to stores this month, giving consumers more delicious choices.”
— Conagra Brands Press Release, June 11, 2025

While management’s tone is optimistic, the market is clearly waiting for proof that innovation and restructuring can deliver results. Until then, BofA’s downgrade casts a shadow over near-term sentiment.

The Bottom Line: Stay Defensive, Watch for Catalysts

BofA’s Underperform call on Conagra Brands is a material development. The company must now prove that its innovation push and portfolio reshaping can reverse negative sentiment and deliver operational improvements. With a potential 9.5% downside flagged by a top-tier analyst, investors should weigh the risk of further underperformance against the possibility of a post-earnings rebound if management delivers above expectations. Until there’s more clarity, caution—and close monitoring—are warranted.