The Next Big Bites: Why Conagra and Danone Are Chewing on Undervalued Potential in the Ozempic Era

As weight-loss drugs like Ozempic reshape consumer diets, the packaged food sector faces a paradox: fewer calories consumed, yet rising demand for healthier, convenience-driven options. In this era of dietary discipline, companies like Conagra Brands (CAG) and Danone (BN) are proving that resilience isn't just about surviving trends—it's about reimagining them. By diversifying into plant-based products, medical nutrition, and premium frozen foods, these firms are building moats that could position them as undervalued darlings of the post-Ozempic world.

The Ozempic Effect: A Double-Edged Spoon

Weight-loss drugs have sparked a global conversation about calorie intake, but their impact on staple food demand has been overstated. While sales of sugary snacks and ultra-processed goods may decline, essential categories like frozen meals, plant-based proteins, and medical nutrition are holding steady—or growing. Morningstar's analysts note that the U.S. food sector trades at a 5% discount to fair value, creating a fertile ground for companies that marry innovation with value.

Conagra: Rebuilding a Moat with Frozen Health

Conagra's “no moat” rating from Morningstar might seem damning, but its strategy suggests it's working to earn one. The company has aggressively shifted its portfolio toward healthier, higher-margin products, such as its $1.2 billion acquisition of the Fresh & Easy brand in 2023 and its expansion of the Healthy Choice line.

Despite recent quarterly sales declines due to inflation, Morningstar's Erin Lash argues that Conagra's long-term margin targets—18% by 2026, up from 14.6% in 2023—are achievable. The company's focus on cost efficiencies (e.g., supply chain automation) and R&D in plant-based proteins could help it outpace peers. With a 3.99% dividend yield and a stock trading at 43% below Morningstar's $46.50 fair value estimate (as of 2023), Conagra offers a blend of income and growth at a deep discount.

Danone: The Global Nutrition Play

Danone's 20% undervaluation (per analyst consensus in mid-2025) stems from its dual focus on plant-based innovation and medical nutrition. Its acquisition of The Akkermansia Company in 2025—focusing on gut health—bolsters its leadership in functional foods, while its $65 million U.S. production line expansion underscores faith in demand for premium products like Volvic water and Alpro plant-based dairy alternatives.

Even as Ozempic users cut calories, Danone's specialized nutrition division (which includes infant formula and clinical nutrition) is proving recession-resistant. Morningstar highlights its ESG Risk Rating of 6th out of 646 in its sector, a moat in itself as ESG-conscious investors prioritize sustainability.

Why Weight-Loss Drugs Won't Derail These Stocks

Critics argue Ozempic's rise could shrink the market for processed foods. But this overlooks two realities:
1. Staple Demand Persistence: Even calorie-conscious consumers need convenient, nutrient-dense meals—a space Conagra and Danone dominate.
2. Premiumization Trends: Danone's $65 million Florida plant isn't just about scale; it's about capturing U.S. demand for organic and functional foods, which grew 8% in 2024.

Morningstar's data shows that value stocks (including packaged foods) trade at a 13% discount to fair value, making them ripe for a rebound as growth stocks cool.

A Buffett-Style Play for the Health-Conscious Investor

Warren Buffett's mantra—“It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price”—applies here. While Conagra lacks a moat today, its undervalued stock and margin-improvement roadmap could build one. Danone, meanwhile, already boasts a wide moat through its brand power and ESG leadership.

Investment Thesis:
- Buy Conagra on dips below $40/share, targeting its $46.50 fair value.
- Overweight Danone at €68/share (as of July 2025), with upside to €85 based on analyst targets.
- Hold for 3–5 years, betting on margin expansion, ESG tailwinds, and the enduring need for health-driven staples.

Final Bites

In an era where every calorie is scrutinized, Conagra and Danone are proving that innovation—and a dash of undervaluation—can be the perfect recipe for outperformance. As Morningstar's data underscores, these companies aren't just surviving the Ozempic wave—they're shaping the next chapter of food's future.

The author is a financial journalist and does not hold positions in the companies mentioned.