Ozempic Fear in Food and Drink Stocks Has ‘Gone Overboard,’ RBC Says
- Analysts say pressures ‘exaggerated,’ may have hit their peak
- Conagra sees it taking years to see full impact of such drugs
The large-cap staples index is around the cheapest since the onset of the Covid-19 pandemic in early 2020 on a two-year forward price-to-earnings basis.
Photographer: Angela Weiss/AFP/Getty ImagesThe stocks rout fueled by the frenzy around a new class of weight-loss drugs is starting to make companies that feed the appetites of consumers look a lot more appealing, according to RBC Capital Markets.
Iconic names like Hershey Co., Coca-Cola Co. along with pretzel maker Utz Brands Inc. and Napa Valley wine producer Duckhorn Portfolio Inc. have notched double-digit losses this year amid worries that people taking GLP-1 drugs — a class of medicines used to treat diabetes and obesity — will cut back on indulgences. The “GLP-1 bear thesis has gone overboard” leaving valuations cheap and upping the appeal of consumer staples stocks, according to RBC analysts including Nik Modi.