Consumers are feeling the squeeze from the rising price of protein.

Consumers are feeling the squeeze from the rising price of protein.

Consumers are feeling the squeeze from the rising price of protein.

Consumers are feeling the squeeze from the rising price of protein.

Consumers are feeling the squeeze from the rising price of protein.

Consumers are feeling the squeeze from the rising price of protein.

There are, however, early signs that the market is starting to adjust.

Consumers are feeling the squeeze from the rising price of protein.

Consumers are feeling the squeeze from the rising price of protein.

Investing.com -- Bank of America lowered its rating for ConAgra Brands to Underperform from Neutral in a note Thursday, lowering its price target for the stock to $20 from $27 a share. The bank warned that rising protein costs will pressure margins and earnings over the next year. BofA’s new price target suggests an approximately 10% downside risk from current levels. BofA said its new price target “reflects 1) lower FY26-FY27 EPSe that are ~15% below consensus and 2) a CY26 P/E valuation multiple of 10x.” The downgrade follows concerns about ConAgra’s cost structure and limited pricing flexibility. “CAG faces unique challenges within packaged food heading into its FY26 based on 1) the company’s inflation basket within COGS (protein) and 2) the limited additional pricing power we see in CAG’s largest category (single-serve frozen meals),” the analysts said. The bank’s updated cost-of-goods-sold (COGS) analysis suggests that “protein inflation (chicken, beef, pork) [is] set to be a meaningful headwind to earnings growth.” While the company managed to offset 4% inflation with 4% productivity gains in FY25, BofA expects COGS inflation to rise to 6% or more, resulting in around 100-150bps of YoY gross margin pressure. BofA also flagged demand elasticity for frozen meals, noting that “historical -1 elasticity” limits pricing power. Following the sale of Chef Boyardee, BofA raised concerns about leverage and dividend coverage. “CAG completed the sale of Chef Boyardee on June 3. While we view this as a positive for CAG longer term (Chef growth dilutive), its relative attractiveness from a margin/cash flow perspective are tough to forgo,” said the bank.