Kraft Foods Group
The note comes after shares of Kraft tumbled this month in the wake of disappointing earnings and slipping sales in the third quarter. For the three months ending in September, earnings slid 3.4% from the previous quarter to $1.48 billion.
"Kraft needs to get smaller before it can begin to capitalize on its scale," wrote analyst Robert Moskow.
The combined entity already announced the cutting of some 2,500 non-factory jobs in August before further cuts of 2,600 factory jobs in November.
But considering how Brazilian private equity firm 3G Capital managed Heinz after acquiring the company in 2013, further layoffs are just a matter of time.
"The Kraft restructuring plan thus far entails a 10% reduction in the workforce with half at the headquarters level and half in the supply chain," Moskow wrote. "But Heinz' workforce shrunk by 27% after 18 months under 3G's management."
Heinz acquired Kraft earlier this year for $46 billion with the backing of Berkshire Hathaway and 3G Capital, which is known for its brutal cost-cutting measures. After buying doughnut-maker Tim Hortons in 2014, 3G Capital-backed Burger King cut between 20% and 40% of the Canadian company's workforce.
With more cuts, "the Kraft Heinz combination can achieve if not exceed expectations for EBITDA growth even if revenue continues to decline."
Credit Suisse projects 2017 EBITDA of $8.47 billion or 28% increase over three years - writing that even if sales were to decline 5% for Kraft, that projection would still be achievable.
"As a result, we think the company will raise its synergy target beyond $1.5 billion once it announces a second stage of workforce reductions," the Moskow wrote.
Credit Suisse analysts reiterated their outperform rating, setting the price target at $85.
Shares of Kraft Heinz rose 1.4% to $74.37 in early trading Friday.