JP Morgan Upgrades ConAgra On 'Highly Attractive' Metric

In a report published Monday, JP Morgan analyst Ken Goldman upgraded the rating on ConAgra Foods Inc (NYSE: CAG) from Neutral to Overweight, while raising the price target from $39 to $52, to reflect last week's announcement that the company's historically activist-oriented investor, Jana, had bought a significant stake in ConAgra and would nominate three board members.

"We have confidence that Jana will effect positive change, based on a) our experience with them and Safeway, and b) CAG's positive reaction to their presence," Goldman said.

The analyst believes that the company is now a prime acquisition target, with Pinnacle Foods Inc (NYSE: PF) being the most likely acquirer of the Consumer Foods business and TreeHouse Foods Inc. (NYSE: THS) potentially looking to acquire the Private Brands business.

"We admire Jana's ability to work with management teams – e.g. Safeway – to create value that benefits all shareholders. We anticipate that it will succeed in this case, as well," Goldman stated, while adding, "We long have opined that the situation at ConAgra, where businesses that should be distinct have been glued together, is untenable. So we have a structure built for activism, a successful activist present, and a CEO in Sean Connolly who historically has been willing to eventually do what is right for shareholders."