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Niche comestibles stock B&G Foods (BGS -7.15%) wasn’t a choice item on any investor’s plate Thursday afternoon. The company saw its share price slide by more than 7% on the day, a far worse performance than the slight decline recorded by the S&P 500 index. The culprit was a recommendation downgrade from an analyst tracking the stock.
That morning before market hours, Consumer Edge Research’s Connor Rattigan changed his recommendation on B&G shares to underweight (sell, in other words) from the previous equalweight (neutral).
It wasn’t immediately clear why Rattigan made his move, but he’s not the only analyst finding his inner bear with B&G. In mid-November, his peer Nik Modi of RBC Capital enacted quite a drastic price target cut on the stock, slicing it to $16 per share; it was formerly $24.
It isn’t surprising that views are dimming on B&G’s prospects. On Nov. 9, in reaction to cost pressures pushing down profitability, the company drastically cut its dividend. The new quarterly payout is $0.19 per share, quite the comedown considering it previously paid nearly $0.48.
The dividend cut announcement was tucked into B&G’s third-quarter earnings report, a period that saw the company miss analyst estimates on both the top and bottom lines. As a relatively small operator in a sector that has been rocked by higher input costs, its fundamentals have been affected and will likely continue to be in the near-term future. For many investors, this has become a stock to avoid.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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