Kraft Heinz (NASDAQ: KHC) has been in the spotlight in recent sessions after announcing plans to split its business into two independent, publicly traded companies.
Wall Street’s reaction to KHC’s revelation has been mixed. Legendary investor Warren Buffett has expressed disappointment in the management’s decision, saying separation isn’t very likely to cure the company’s problems.
On the other hand, however, Morgan Stanley analyst Megan Clapp believes the split will actually prove meaningfully positive for Kraft Heinz stock that’s down nearly 20% versus its year-to-date high at the time of writing.
Why Morgan Stanley is positive on Kraft Heinz stock
According to Megan Clapp, the Kraft Heinz split is a strategic reset rather than a setback.
In a research note this morning, the Morgan Stanley analyst cited improved valuation metrics and early signs of operational stability as she upgraded KHC stock to “equal weight”.
Clapp agreed that earnings growth in fiscal 2026 will likely remain under pressure – but said the split will help limit downside risk.
“We think the worst is behind us and see more favourable risk-reward,” she told clients.
Kraft Heinz shares are worth buying at current levels since the company’s organic sales growth is beginning to stabilise, and estimates now look more grounded, Clapp added.
Note that KHC currently pays a rather lucrative dividend yield of 6.15%, which makes it all the more attractive to own for the long term.
How high can KHC shares fly in 2025?
Morgan Stanley raised its price objective on KHC shares today to $29, indicating potential upside of more than 10% from current levels.
The firm’s revised call reflects a more balanced view of Kraft Heinz’s prospects following its decision to unwind the 2015 mega-merger.
Kraft Heinz stock is currently trading at a price-to-sales (P/S) multiple of 1.28 only, which Megan Clapp dubbed “reasonable” for a packaged food business in her latest research note.
“The decision to separate into two companies allows Global Taste Elevation Co. to reposition as a higher-growth business with international and foodservice exposure.”
All in all, the analyst believes Kraft Heinz’s split will prove a long-term tailwind for its stock price.
Over the long term, Clapp believes that Kraft Heinz’s split should contribute to lasting tailwinds.
Is it worth buying Kraft Heinz shares today?
Despite Buffett’s scepticism, Morgan Stanley’s view suggests the break-up could position Kraft Heinz for more sustainable growth – especially in international and foodservice channels.
In the long run, the split sure could unlock long-term value embedded in KHC shares – but their ultimate trajectory will hinge on how well the announced separation is executed.
For now, Wall Street analysts rate Kraft Heinz stock at “hold” with the mean price target of $28.65, indicating potential for about a 10% rally from current levels.
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