Conagra: Cutting Fair Value Estimate on Challenged Long-Term Outlook, but Shares Still Undervalued

After updating our forecasts and revising our long-term views, we are cutting our fair value estimate for Conagra to $33 per share from $46.50, mostly from a roughly 150-basis-point reduction in our midcycle operating margin forecast as we expect competition to erode recent expansion. Even at our reduced fair value estimate, shares look undervalued as we think the market is overweighting the near-term volume challenges Conagra is facing. As the rapid price increases of the recent past slow, we think consumers will return to more normalized buying patterns.