Challenges in the U.S. Cereal Market and Skepticism over Future Performance Goals – TipRanks Financial Blog


WK Kellogg Co (KLG) has received a new Hold rating, initiated by TD Cowen analyst, Robert Moskow.

Robert Moskow has given his Hold rating due to a combination of factors, primarily focusing on the struggling U.S. cereal market and WK Kellogg Co’s declining market share. Moskow notes that despite Kellogg’s recent spin-off from Kellanova, the company’s future performance could be impacted by years of underinvestment that may have damaged its brands and curtailed its capacity to stage an effective turnaround. He also points to the structural decline of the U.S. breakfast cereal category and Kellogg’s inability to adapt to changing consumer preferences.


Furthermore, Moskow expresses skepticism about the company’s ability to achieve its mid-teens EBITDA margin goal by 2026, given the declining volume in the cereal category and, consequently, the probability of more aggressive price discounting by competitors. He highlights the company’s loss of market share over the years, even before the 2021 fire and labor strike at its manufacturing facilities. Moskow’s rating also takes into account management’s overconfidence in the company’s top brands, which he believes lack the market power of competitors’ must-have brands.

Moskow covers the Consumer Defensive sector, focusing on stocks such as B&G Foods, Conagra Brands, and McCormick & Company. According to TipRanks, Moskow has an average return of 5.2% and a 51.27% success rate on recommended stocks.

In another report released on October 16, Bank of America Securities also initiated coverage with a Hold rating on the stock with a $11.50 price target.


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WK Kellogg Co (KLG) Company Description:


WK Kellogg Co is a leading food company in the U.S., Canada, and Caribbean with a deep heritage of innovation and operational success, supported by its portfolio of trusted, beloved brands, includingKellogg¿s,Frosted Flakes,Froot Loops,Mini-Wheats,Special K,Raisin Bran,Rice Krispies,Corn Flakes,Kashi, andBear Naked, that have delighted consumers for more than a century.

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