Kraft Heinz Stock Wins Upgrade After Brutal Selloff: Analyst Says Break-Up Case Limits Downside

Kraft Heinz Co. shares tumbled nearly 7% on Tuesday, marking their worst session since May 2022, after the company said its board had approved a plan to split the food giant into two independent, publicly traded companies through a tax-free spin-off.

The news sent 24-hour message volume for the stock soaring by a whopping 8,500% on Stocktwits, where investors turned 'extremely bullish' by the end of the day, indicating they are eyeing a rebound. KHC's retail sentiment score (92/100) ended at its highest this year on Tuesday.

Backing their belief was Morgan Stanley, which upgraded Kraft Heinz to 'Equal Weight' from 'Underweight' with a price target of $29, up from $28, which implies a more than 11% upside from the last close.

The firm's prior underweight thesis has "largely played out" and estimates for the stock are now "more reasonable", the analyst tells investors in a research note, according to a summary on The Fly.

While Kraft Heinz's fiscal-year 2026 growth is likely to remain pressured, the planned separation will limit the downside, the research firm added.

"Just remember what happened to GE when they split into 3 separate companies," said one bullish user on KHC's Stocktwits stream.

Another optimist urged investors to "seize this opportunity," arguing that KHC's split "changes nothing" as the company will "make the same money."

One company from the split, temporarily referred to as "Global Taste Elevation Co.", will house Kraft Heinz's international portfolio of sauces, spreads, seasonings, and shelf-stable meals. It generated $15.4 billion in net sales in 2024 and will include iconic brands such as Heinz, Philadelphia, and Kraft Mac & Cheese. 

The second company, "North American Grocery Co.", will focus on staple grocery brands in the U.S. and Canada. It brought in $10.4 billion in 2024 sales and will include Oscar Mayer, Kraft Singles, and Lunchables. 

Earlier in the day, Mizuho analyst John Baumgartner said Kraft Heinz's plan to split "likely strengthens the floor under the stock," but added that questions about growth would limit the magnitude of near-term upside.

Kraft Heinz stock has lost over 15% this year, compared with rival Mondelez's 3.5% gain and General Mills' 22.6% tumble.

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