Oil prices, weight loss pills, and policies "triple attack", American leisure food giant is bearish by investment banks.

Due to the impact of multiple adverse factors such as the rise in crude oil prices and the rapid popularization of GLP-1 weight loss drugs, analyst Alexia Howard of Bernstein has significantly shifted her stance on large packaged food companies in the United States to pessimistic, downgrading the ratings of General Mills, Inc. (GIS.US), Conagra (CAG.US), Campbell Soup Company (CPB.US), and Kraft Heinz Company (KHC.US) from "in line with market" to "underperforming the market." Alexia pointed out that the upward trend in oil prices is pushing up costs such as transportation, packaging, and raw materials for companies like Shenzhen Agricultural Power Group. The reduction in federal food aid programs, the increased penetration of weight loss drug GLP-1, and the Trump administration's "Make America Healthy Again (MAHA)" policy agenda are all likely to continue to suppress consumer demand for junk food and sugary drinks. The home consumption boom during the pandemic has significantly faded. While the lockdown environment drove increased demand for snacks such as Conagra's Slim Jim beef jerky and Kraft Heinz Company's pasta products, companies were able to maintain profit performance by raising prices to offset rising raw material costs. Now, in the context of continued high inflation and low consumer confidence, the industry is once again facing downward pressure on profits. In her latest research report, Howard pointed out that a new round of input cost inflation is gradually approaching, and food companies focused on the U.S. market may lack the ability to smoothly pass on cost pressures to downstream retailers, especially when retailers are unwilling to accept further price increases for brands with sales growth behind that of stores. Overall, Wall Street's sentiment towards this sector is bearish: Campbell Soup Company currently has no "buy" ratings, while more than 80% of covering analysts for General Mills, Inc., Conagra, and Kraft Heinz Company have given "hold" or "sell" ratings. The S&P packaged food industry index has retraced 15% from its February high and closed at its lowest level since March 2020 on Thursday. Howard also noted that the industry generally has high dividend yields and valuations are at cyclical lows, but if the dividend payout ratio continues to rise, the market will begin to worry about the risk of future dividend cuts. In addition, the contraction of spending on the Supplemental Nutrition Assistance Program (SNAP) is expected to result in an additional drag of about 1 percentage point on industry sales. She said, "Individually, these factors may not pose a significant challenge, but on top of the ongoing pressure from GLP-1 penetration and the MAHA policy, these new variables make this year's operating environment even more complex."