Kraft Heinz Company (KHC)

[FUNMAN]

Credit Suisse warns of Kraft dividend cut

Feb. 5, 2020 2:34 PM ET

By: Clark Schultz, SA News Editor

I am betting that the next ER is better than Credit Suisse anticipates. That's why I haven't sold the other 2/3's of my position.

Credit Suisse lowers its Q4 organic sales estimate on Kraft Heinz (KHC +0.3%) to -1.6% vs. -1.3% consensus after looking at retail consumption data.

Perhaps of even greater interest, the firm is warning of a dividend cut.

"We expect a step-down in EBITDA in 2020 of $200M just from divestitures and incentive compensation alone. If so, we do not see how the company can achieve the rating agencies' targets unless it cuts its dividend. We think that management would announce this decision on its 4Q earnings call rather than wait until the release of its Enterprise Strategy in early 2020," reasons analyst Robert Moskow.

CS keeps an Underperform rating on Kraft Heinz.

Kraft is due to report on earnings on February 13.