Kraft downgraded by Morgan Stanley analyst
(Crain’s) — Morgan Stanley analyst David Adelman this week downgraded Kraft Foods Inc. stock to "underweight" from "equal weight." His view: The boost Kraft stock got this week is unwarranted.
After a lawsuit filed by "light" cigarette smokers was granted class-action status this week, parent company Altria Group announced it will delay spinning off Northfield-based Kraft.
Kraft stock reached a new 52-week high of $36.47 on the news, a rally Mr. Adelman attributed to investors covering short positions in Kraft, as well as to reduced concern over the trading impact of Altria distributing its 88% stake in the foodmaker to current Altria shareholders.
In a note to investors, Mr. Adelman said he expects Kraft's share price and valuation to come under significant pressure when Altria finally spins off Kraft.
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"We find it difficult to articulate a compelling investment case for making a substantial investment in Kraft Foods (at current prices)," he writes.
A Kraft spokeswoman says: "Morgan Stanley's note essentially focuses on externalities — factors in the stock market, outside of Kraft. We are focused on strengthening the fundamentals of our business and accelerating our growth."
Kraft stock closed Friday at $35.66, up 4.1% for the week.
