BofA Initiates Coverage of Karat Packaging with Neutral Rating and $28 Price Target

BofA initiated coverage of Karat Packaging (KRT) with a Neutral rating and $28 price target.

BofA Securities has initiated coverage on Karat Packaging Inc. (NASDAQ: KRT) with a Neutral rating and a $28.00 price target. The investment bank appreciates the company's business model transition and strong financial health, but considers the stock fairly valued at current levels.

Karat Packaging, a foodservice packaging supplier, has shifted its focus from manufacturing to distribution. Manufacturing sales now represent approximately 11% of business in 2024, down significantly from 26% in 2022. The company maintains strong financial metrics, with a notable 6.84% dividend yield and liquid assets exceeding short-term obligations [2].

BofA Securities notes that while it appreciates Karat Packaging’s business approach, the firm considers the stock fairly valued at current levels. The company supplies packaging, utensils, and other products to the foodservice industry. Despite potential consumer macroeconomic risks, BofA expects Karat Packaging’s volumes to grow at high single-digit percentages, aligning with the company’s current revenue growth of 8% [2].

Karat Packaging reported its second-quarter earnings for 2025, exceeding both earnings per share (EPS) and revenue forecasts. The company achieved an EPS of $0.57, slightly above the anticipated $0.56. Additionally, revenue reached $124 million, surpassing the $123.97 million estimate. These results reflect positively on the company’s financial performance. Despite the favorable earnings and revenue figures, the stock experienced a decline in after-hours trading, though specific reasons for this were not detailed [1].

BofA Securities highlights that employment trends remain an important metric to monitor for the foodservice packaging sector, noting that Karat operates in what it describes as a competitive industry with macroeconomic risks [2].

References:
[1] https://finance.yahoo.com/news/karat-packaging-second-quarter-2025-140104769.html
[2] https://www.investing.com/news/analyst-ratings/karat-packaging-stock-initiated-at-neutral-by-bofa-with-28-target-93CH-4187846