Morgan Stanley analyst Megan Alexander maintained a Sell rating on WK Kellogg Co (KLG – Research Report) today and set a price target of $17.00.
Megan Alexander’s rating is based on several key factors impacting WK Kellogg Co’s financial outlook. The company’s first-quarter results, while aligning with consensus expectations in terms of EBITDA, revealed weaker quality due to a notable miss in organic sales growth and a slight miss in gross margin. This has led to a downward revision of the full-year EBITDA guidance, primarily due to weaker-than-expected demand and additional costs from tariffs.
Furthermore, the company’s ongoing weak consumption and market share trends, as evidenced by recent scanner data, cast doubt on its ability to meet its bottom-line outlook for the remainder of the year. The revised profit outlook for 2025 suggests a more challenging path to achieving the company’s ambitious margin expansion goals by 2026, with potential ongoing impacts from tariffs and reformulation costs. Consequently, Megan Alexander has lowered the EBITDA estimates for FY25 and FY26, resulting in a reduced price target of $17, reinforcing the Sell rating.
In another report released yesterday, Bank of America Securities also reiterated a Sell rating on the stock with a $15.00 price target.