Citi challenges the bears’ notion that rising costs will sink ConAgra Foods’ (CAG) US Consumer business. In fact, the bank reiterates the stock as their top pick and sees a 50% upside:
We believe CAG’s F4Q08 results will represent a positive inflection point leading to a strong F2009, where we believe higher prices and $225 mm in costs savings should drive substantial increases in US Consumer profitability, serving as a major catalyst for the stock. We continue to see very good upside in shares of ConAgra.
Betting on the US consumer is scary, but they do have to eat (and are now more likely to do it at home).
Citi reiterates BUY for ConAgra, target price $33