Barclays cuts General Mills stock price target to $60 from $65

On Thursday, Barclays (LON:BARC) made an adjustment to General Mills ’ (NYSE:GIS) financial outlook, reducing the company’s price target from $65.00 to $60.00, while keeping an Equalweight rating on the stock. The decision by analyst Andrew Lazar comes as General Mills plans to increase its trade and media spending to enhance consumer value. According to InvestingPro data, 12 analysts have recently revised their earnings estimates downward, with price targets ranging from $54.00 to $73.39.

Lazar addressed the concerns of investors regarding the potential impact of this strategy on the company’s earnings, stating, "With GIS planning a more significant step up in trade and media spend going forward to improve consumer value, we can understand investors questioning whether this represents the final earnings cut." He further noted that the effectiveness of this increased spending in driving organic sales growth is necessary to determine the full implications for earnings. The company’s revenue declined by 2.62% over the last twelve months, though it maintains a healthy dividend yield of 4.05% and has sustained dividend payments for 55 consecutive years.

General Mills, known for its various consumer food brands, is aiming to strengthen its market position through heightened promotional activities. The company believes that by investing more in trade and media, it can better reach consumers and increase its organic sales. InvestingPro analysis shows the company trading at a P/E ratio of 13.3, suggesting relatively modest valuation multiples despite current challenges. Get comprehensive insights and more exclusive metrics with an InvestingPro subscription.

The move by General Mills to allocate more funds towards advertising and promotions is a strategic effort to stay competitive in a challenging market. The company is focusing on improving the perceived value of its products among consumers, which could potentially lead to increased sales volumes.

Barclays’ updated price target reflects the firm’s assessment of the balance between these increased expenses and the anticipated benefits of the strategy. Investors and market watchers will be closely monitoring General Mills’ performance to see if the increased spending will translate into the desired sales growth.

In other recent news, General Mills reported its third-quarter fiscal 2025 earnings, which exceeded analyst expectations with an earnings per share (EPS) of $1.00, surpassing the anticipated $0.98. However, the company faced challenges on the revenue front, reporting $4.8 billion, which was below the forecast of $4.99 billion. This mixed performance reflects ongoing pressures in sales, influenced by consumer behavior trends and market conditions. Stifel analysts maintained their Buy rating on General Mills, with a price target of $65, despite the company’s softer sales and increased reinvestment expenditures. They highlight that General Mills is gaining market share in targeted areas, suggesting confidence in the company’s strategic investments. Looking forward, General Mills plans to reinvest cost savings into growth initiatives, with a focus on accelerating organic growth and innovation in fiscal year 2026. The company anticipates a slight decline in underlying EPS, excluding the impact of divesting its U.S. Yogurt business, but expects sequential improvement in volume trends. Analysts at Stifel predict that these strategic investments will positively impact the company’s future performance.

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