We have detected interesting dark pool activity in CAG stock on December 20, 2019, that looks like buying IMO. The dark pool activity came right after Evercore ISI analyst David Palmer raised his price target on the stock.

Volume candle chart of CAG stock on December 20, 2019. The dark pool trades are not the largest volume trades on this chart as far as we know with current data from FINRA. Notice that each time these trades came off the dark pool, the price of CAG moved drastically higher which suggests that these were buy orders placed over the dark pool.

These could be Evercore ISI trades or they could be an institutional client of Evercore ISI.

Right before these dark pool trades hit, Evercore ISI analyst David Palmer raised his price target for Conagra Brands to $39 from $35 and he reiterated an Outperform rating on the shares following the company’s fiscal Q2 results. The company’s organic growth was broadly ahead of estimates, especially so in legacy Pinnacle brands, Palmer tells investors in a research note. The analyst’s “bull case scenario” of $47 per share assumes Conagra exits fiscal 2020 with 2%-3% organic sales growth.

The dark pool trades could also be linked to UBS or one of their institutional clients. UBS analyst Steven Strycula raised his price target on Conagra Brands to $38 and kept his Buy rating after its Q2 earnings beat and a higher than expected organic sales growth of 1.6%, tracking “above retail scanner data” of 0.5%. The analyst believes that organic sales growth will accelerate further in Q3 and Q4, with an added positive view of the company’s portfolio complexity reduction given its sale of Lender’s Bagels and peanut butter plant assets.

Let’s look at what got these analysts fired up about CAG stock.

On December 19, 2019, Conagra Brands, Inc. (NYSE: CAG) reported results for the second quarter of fiscal year 2020, which ended on November 24, 2019. Conagra Brands reported Q2 adjusted EPS of 63c versus the consensus estimate of 57c. The company reported Q2 revenue of $2.8B which was in-line with the consensus.

Sean Connolly, president and chief executive officer of Conagra Brands, said, “Our second quarter results reflect solid execution in applying the Conagra Way playbook across our portfolio. We maintained our strong momentum in frozen and snacks. We also made good progress on our large grocery brands, Hunt’s and Chef Boyardee, both of which made sequential improvements. We also continued to make very good progress on the Pinnacle integration, and we remain squarely on-track with our plans to improve key Pinnacle brands.”

He continued, “Our expectation for fiscal 2020 remains that first-half investments will result in strong second-half performance. The second-half is when we expect to see the greatest impact from new frozen and snacks innovation, continued smart promotional support in key grocery brands, the ongoing implementation of our Pinnacle action plan, and synergy capture.”

In the quarter, net sales increased 18.3% to $2.8 billion. Reported net sales growth primarily reflects:

  • a 19.6% increase from the acquisition of Pinnacle;
  • a 2.9% net decrease from the divestitures of the Wesson oil business, the Gelit business, and the DSD snacks business (the “Sold Businesses”); and
  • a 1.6% increase in organic net sales.
  • The 1.6% increase in organic net sales in the quarter was driven by 1.0% volume growth and 0.6% price/mix favorability. Favorable net pricing and mix were partially offset by the Company’s continued actions to support its brands with brand-building investments with retailers.

With the company’s earnings beat last week and subsequent bullish analyst price target hikes, the dark pool activity on December 20, 2019, looks to be buying IMO, especially since we see the price of CAG stock immediately moving higher after the prints came off the dark pool.

Looking at the options flow on Friday, December 20, 2019, there was a large put option sweep bought with a strike of $33 and an expiration of January 17, 2020. The put sweep was placed at 9:15 AM so the holder of this put contract, valued at $10.9K, is down on his bearish bet. This trade might be a put hedge against a downward move in CAG stock to $33 before January 17, 2020. It isn’t unheard of to have an institutional trader place a huge buy order over the dark pool, and then place a public put options trade as insurance against a pullback but we’re totally speculating here as this put options trade could have nothing to do with the dark pool activity in CAG stock on December 22, 2019.

finviz dynamic chart for  cag
Conagra Brands News From Google