04:08 PM EDT, 10/03/2024 (MT Newswires) -- Conagra Brands' ( CAG ) weaker-than-expected fiscal first-quarter results triggered a "slightly overblown" market reaction that may have overlooked sequential volume progress in key areas, RBC Capital Markets said Thursday.

The brokerage lowered estimates for the packaged food maker's fiscal 2025, reducing its revenue forecast to $11.88 billion from $11.97 billion. RBC is now modeling adjusted earnings per share of $2.60 in the ongoing year, down from $2.63 previously.

This comes after the seller of brands such as Pam and Slim Jim reported below-expected results on Wednesday for the three months ended Aug. 25. Adjusted earnings per share advanced nearly 20% year over year to $0.53 while revenue fell 3.8% to $2.79 billion.

Shares of Conagra closed 2.4% lower on Thursday on top of an 8.1% post-earnings selloff on Wednesday. RBC Co-Head of Global Consumer and Retail Research Nik Modi said the reaction was "slightly overblown."

"While results don't get us overly excited, the noise from supply chain issues and foodservice weakness make the print look optically worse," he said. "It is important to note that (Conagra) has seen sequential volume progress in key focus areas of investment like frozen and snacks."

About 71% of Conagra's retail business either held or gained volume share during the quarter, an acceleration from 65% in the fiscal fourth quarter, according to RBC.

The results included production issues that impacted Hebrew National hotdogs during peak season, as well as lower foodservice volume. Conagra continues to expect full-year adjusted EPS between $2.60 and $2.65 and organic sales to range from declining 1.5% to being flat year over year. The Capital IQ consensus is for normalized EPS of $2.58 and revenue of $11.91 billion.

RBC lowered its fiscal 2025 organic sales outlook to reflect a slight year-over-year decline and said that the first-quarter underperformance puts pressure on back-half growth in a still challenging macro environment.

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