RBC Initiates Kraft Heinz at 'Outperform,' Citing 2027 Growth Turnaround

RBC Capital Markets initiated coverage on The Kraft Heinz Company (NASDAQ: KHC) with an 'Outperform' rating and a $32 price target, asserting that the packaged food maker is on the cusp of a growth revival that investors have yet to fully appreciate.

Path to Growth

In a note to investors Thursday, RBC analyst Nik Modi projected that the balance between Kraft Heinz's growing and declining businesses—what he termed the company's "seesaw"—will tilt favorably in 2027. This shift is expected to be driven by $700 million in strategic reinvestments into pricing, innovation, and marketing that are already beginning to show results.

RBC's forecast sits above the market consensus, modeling 0.9% organic revenue growth for Kraft Heinz in 2027, more than double the Street's expectation of 0.4%. The firm's earnings estimates for that year are also higher than the consensus view, reflecting confidence in the company's strategic changes.

Innovation and Retailer Confidence

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The analysis points to a more robust and focused innovation pipeline as a key driver. According to RBC, new products like PowerMac and Capri Sun Hydrate are designed to address specific consumer needs rather than simply defending shelf space. This strategy appears to be resonating with key partners.

Modi noted that conversations with trade contacts revealed positive feedback from retailers, who described Kraft Heinz's 2027 innovation slate as strong and strategically sound. The report also highlighted improved collaboration on joint business plans, contrasting with what RBC sees as a prevailing investor assumption that the company's progress will stall.

Addressing Market Debates

The research note also addressed several key debates surrounding KHC stock. The analyst tackled investor concerns regarding the company's exposure to the impact of GLP-1 weight-loss drugs, competition from private-label brands, and the potential for a significant sale of shares by major stakeholder Berkshire Hathaway.