Kraft Heinz faced a severe market reaction following the release of its latest financial figures, with shares tumbling as underlying operational weaknesses overshadowed a minor earnings beat. The historic food conglomerate’s third-quarter 2025 report, published on October 29, triggered a wave of price target reductions from prominent financial institutions, raising serious questions about the company’s strategic direction and its planned corporate separation.
Revenue Declines Overshadow Narrow Earnings Beat
While Kraft Heinz’s adjusted earnings per share of $0.61 narrowly exceeded the $0.58 analyst consensus, this positive detail was quickly eclipsed by concerning revenue performance. The company posted sales of $6.24 billion, falling short of the anticipated $6.26 billion and representing a 2.3% year-over-year decrease.
More alarming were the fundamental operational metrics. Sales volume contracted by 3.5%, indicating reduced consumer demand for the company’s products. Simultaneously, the gross margin compressed by 230 basis points to 31.9%, reflecting ongoing cost pressures. The most dramatic decline appeared in adjusted operating income, which plummeted 16.9% to $1.1 billion.
Chief Executive Officer Carlos Abrams-Rivera acknowledged the challenging environment, stating that persistent inflation continues to influence global purchasing patterns while consumer sentiment further deteriorates.
Financial Institutions Respond with Widespread Downgrades
Wall Street’s response was swift and decisive. Within days of the earnings release, five major investment banks revised their price targets downward:
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- Mizuho Securities: Reduced from $29 to $27 (October 28)
- TD Cowen: Cut from $28 to $26 (October 29)
- Evercore ISI: Lowered from $30 to $28 (October 29)
- BNP Paribas Exane: Dropped from $29 to $26 (October 29)
- JPMorgan Chase: Decreased from $27 to $25 (October 30)
JPMorgan justified its reduction by citing “ongoing volume challenges and delayed recovery.” The consensus recommendation remains “Hold,” indicating limited confidence in the company’s near-term prospects. The average price target now stands at approximately $27, suggesting minimal upside from current trading levels.
Corporate Split Faces Mounting Scrutiny
Amid these operational headwinds, management continues to pursue its previously announced plan to separate into two independent entities during the second half of 2026. The restructuring would create “Global Taste Elevation Co.” focusing on international sauces and seasoning products, and “North American Grocery Co.” housing the U.S. brand portfolio.
However, what initially generated optimism when announced in September 2025 now faces increasing skepticism. The recent quarterly performance raises legitimate concerns about the timing and feasibility of such a complex reorganization during periods of operational instability.
Compounding these challenges, management downwardly revised its full-year 2025 guidance. Organic net sales are now projected to decline between 3.0% and 3.5%, compared to the previous forecast of a 1.5% to 3.5% contraction.
Kraft Heinz confronts a structural industry shift as consumers increasingly favor healthier, less processed food options. Previous initiatives including advertising campaigns and product reformulations have failed to generate meaningful volume recovery. The company’s next quarterly report in February 2026 will prove critical in determining whether this established food giant can successfully navigate its current challenges.
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