Conagra Brands Inc.

We expect organic sales and adjusted EBITDA will improve materially in the second half of fiscal 2020 (December 2019 to May 2020) due primarily to substantial innovation across much of the portfolio that will hit shelves toward the end of calendar 2019, and continued synergy realization. This should result in steady adjusted EBITDA growth and, in conjunction with continued debt repayment, clear credit ratio improvement, including adjusted leverage in the high-4x area by the end of fiscal 2020 and below 4.5 by the end of fiscal 2021. If this improvement does not materialize, which is possible if Conagra's innovation fails to resonate, competition with packaged food rivals or private-label intensifies, or inflation escalates, we could take a negative rating action,

...Despite its challenges, with the acquisition of Pinnacle Foods, Conagra Brands Inc.could become a stronger competitor. Notwithstanding the company's underperformance since acquiring Pinnacle, we believe it can still grow because of various on-trend brands and its history of product innovation. Its core brand strength resides in its frozen foods, snacks, and sweet treats segments. Key brands include Birds Eye, Marie Callender's, Healthy Choice, Wish Bone, and Duncan Hines. Management indicates it has a robust slate of innovation in store for fiscal 2020, which is why it increased its organic sales growth target for 2020 to 1.0%-1.5% from 1%, despite a disappointing end to fiscal 2019. We believe the Pinnacle portfolio, which has declined at a mid- to high-single-digit rate since the acquisition, has many fundamentally good brands that should be able to resume growth with effective innovation. In addition, earlier in 2019 Conagra increased its acquisition synergy target to $285 million over...

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