Wells Fargo downgrades ratings for Conagra, Campbell Soup, and General Mills, warning of profit risks

LootboxPhobia · 2026-03-13T00:10:49+00:00

Wells Fargo downgraded Conagra Brands, The Campbell's Company, and General Mills to "underperform," warning of profit pressure and high leverage risks. Analysts pointed out that all three companies are expected to face high leverage and weak consumer trends by 2027, and lowered price targets. Despite potential upside risks from consumer improvement, negative factors are likely to be more dominant.

LootboxPhobia

2026-03-13 00:10:49

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Investing.com — Wells Fargo downgraded the stocks of Conagra Brands, The Campbell’s Company, and General Mills to “Reduce” in a research report on Thursday, warning that a combination of earnings pressure, high leverage, and excessive dividend payout ratios pose a risk of underperformance for these companies.

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Analyst Chris Carey said the rating adjustment reflects “the combined risks of earnings per share, high leverage, and tight dividend payments.” He believes this combination “may lead to underperformance compared to peers, despite lower valuations and market sentiment.”

Wells Fargo’s earnings per share forecasts for fiscal 2027 are 10% below the market consensus for Campbell’s, 9% below for Conagra, and 6% below for General Mills. The bank also expects leverage ratios for all three companies to exceed 4 times by 2027, the highest within their coverage.

The bank has significantly lowered its target prices, reducing Conagra’s to $15, Campbell’s to $20, and General Mills to $35, all based on 2027 earnings multiples.

Carey pointed out that weak consumer trends, “rising inflation,” and tight budgets for sales, general, and administrative expenses are additional pressures facing fiscal 2027.

He added, “Leverage ratios and dividend payout ratios are approaching levels that are still manageable but definitely concerning.”

While some investors may believe that recent weakness has already priced in bad news, Wells Fargo warns that the sector “may be entering another fiscal year with earnings risks and high leverage.”

However, Carey also highlighted upside risks, including improved summer consumer spending, easing inflation, or better cost savings, but he remains convinced that negative catalysts are more likely to dominate.

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