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On Friday, Citi analyst Thomas Palmer adjusted the price target for General Mills (NYSE:GIS) stock, reducing it to $58 from the previous $60, while maintaining a Neutral rating on the shares. This adjustment aligns with broader market sentiment, as InvestingPro data shows 10 analysts have recently revised their earnings estimates downward. Palmer initiated a downside catalyst watch in anticipation of the company’s fiscal third-quarter 2025 earnings report scheduled for March 19. The analyst expressed concerns over potential risks to both sales and earnings for General Mills.
Palmer noted that General Mills’ efforts to stimulate sales growth through investments have not translated into significant volume increases and are adversely impacting pricing and margins. This is reflected in the company’s recent performance, with revenue declining 1.48% over the last twelve months and a gross profit margin of 35.27%. Additionally, shipment timing issues are expected to affect the third-quarter results in North America Retail (NAR) and the Pet segment. He also pointed out that consumer takeaway trends have recently weakened in key product categories, such as snack bars and cereals.
The upcoming sale of General Mills’ U.S. yogurt business is another factor expected to apply pressure on Organic Sales Growth (OSG), as it has recently contributed approximately 0.5% to NAR takeaway growth. Palmer cautioned that consensus estimates might be overly optimistic, and despite these challenges, General Mills’ stock continues to trade at above-average premiums based on Price-to-Earnings (P/E) and Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) ratios when compared to its lower-growth food industry peers. According to InvestingPro, the stock currently trades at a P/E ratio of 12.95 and offers a dividend yield of 4.01%, with a 55-year track record of consistent dividend payments. For deeper insights into General Mills’ valuation and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro, along with real-time metrics and expert analysis for over 1,400 US stocks.
In other recent news, General Mills has introduced new ramen flavors inspired by its Old El Paso and Totino’s brands, available at Walmart (NYSE:WMT) stores and online starting in April. This product launch is part of the company’s strategy to innovate and expand its brand offerings. In financial developments, Jefferies has raised General Mills’ stock price target to $62, maintaining a Hold rating, while Piper Sandler has lowered its target to $71, citing concerns about slower sales growth and inventory reductions. Both firms have highlighted challenges faced by the company, including potential guidance revisions and regulatory uncertainties.
Additionally, General Mills has announced a leadership change in its North America Pet segment, with Liz Mascolo set to become Segment President in 2025, following Jon Nudi’s planned retirement. Nudi has been credited with significant improvements in net sales and market share during his tenure. The company’s recent press release indicates a focus on strategic objectives, including brand building and innovation, with reported net sales of $20 billion for fiscal 2024. Meanwhile, Health and Human Services Secretary Robert F. Kennedy Jr. has urged General Mills and other food companies to eliminate artificial dyes, signaling a push for higher health standards in food products.
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