Morgan Stanley is adopting a more constructive view on Kraft Heinz following the company’s decision to split in two. The bank upgraded the food and beverage stock to equal weight rating from underweight. It also lifted its price target to $29 per share from $28. Analyst Megan Clapp’s updated forecast implies an upside of 11% from here. The move comes after Kraft Heinz announced it would split into two companies . But shares fell 7% on Tuesday after Warren Buffett told CNBC he was ” disappointed ” with the break-up. Buffett’s Berkshire Hathaway is the largest Kraft Heinz shareholder with a 27.5% stake in the company. Shares of Kraft Heinz have stumbled 15% this year and fell 7% on Tuesday alone after the company announced it would split into two companies . KHC YTD mountain KHC YTD chart Kraft Heinz’s split will unwind much of a $46 billion merger from 2015 that created one of the world’s largest food companies. The two businesses will be split between shelf-stable meals such as Heinz, Philadelphia and Kraft mac and cheese. The second vertical would be a “scaled portfolio of North America staples” and include Oscar Mayer, Lunchables and Kraft singles. But Morgan Stanley’s Clapp viewed the merger reversal as a potential catalyst for Kraft Heinz. In particular, the stock’s valuation appears to have bottomed out following the decision, she wrote. “We upgrade KHC to EW as our prior UW thesis has largely played out, with estimates now more reasonable and OSG showing early signs of stabilization. And while FY26 EPS growth will likely remain pressured, valuation looks reasonable and we believe the planned separation will limit downside,” Clapp said. “Net, we are upgrading to EW as we think the worst is behind us and see a more favorable risk/reward following the -15% YTD stock decline (including -7% the day of the announcement). Over the long term, Clapp believes that Kraft Heinz’s split should contribute to lasting tailwinds. “The decision to separate into two companies allows the new Global Taste Elevation Co. to reposition as a higher-growth business with greater international and foodservice exposure,” she wrote. “We view the transaction as enhancing longer-term strategic flexibility.”
