Kraft Heinz (KHC) slid to its 52-week low in Friday's trading. Don't take that as a buying opportunity.
Shares are down over 10% heading to the close after reporting a disappointing earnings release on Thursday night and weakened guidance. The slide has left shares at their lowest point since 3G Capital and Warren Buffett's Berkshire Hathaway (BRK.A) (BRK.B) teamed up to merge Kraft Foods and H.J. Heinz.
The company has explained these as one-off charges, possibly offering opportunity to those looking to buy a dip, but those covering the stock are not so certain.
"While KHC spoke of 'one-offs' in three quarters, the increased spending after two years of steep cost cuts may be mostly about catching up," Susquehanna Group analyst Pablo Zuanic said. "We wonder about the real impact of increased spending in commodity-like categories like cheese, cold cuts, and nuts."
Zuanic values Kraft Heinz at the bottom of the large-cap food group as a result, setting a price target of $47 and downgrading the stock from neutral to negative on the perception of persistent risks.
Even experts that are advising to hold shares are not suggesting any accumulation.
"Against a backdrop of mediocre top line growth and margin compression, we would not add to positions," CFRA analyst Cathy Seifert said. "We cut our 12-month target price by $7, to $56."
If even the Oracle of Omaha can't dig the company out of its current rut that has left shares down 35% year to date, it's hard to bet that a bull case is around the corner.