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Investing.com - TD Cowen has reduced its price target on General Mills (NYSE:GIS) to $50.00 from $52.00 while maintaining a Hold rating on the stock, citing multiple headwinds facing the food company. The stock, currently trading at $52.86, sits near its 52-week low of $52.39, with InvestingPro analysis suggesting the company is slightly undervalued based on its Fair Value model.
The research firm expects General Mills to face approximately 6% cost of goods sold inflation in fiscal year 2026, including 1.2% from tariffs. Despite these rising costs, TD Cowen anticipates General Mills will implement a 1% price decline to fund investments in key categories including snacks, pet food, and dough. The company maintains solid profitability with a gross margin of 35.4% and return on equity of 27%.
TD Cowen maintains a below-consensus earnings per share forecast of $3.70 for fiscal year 2026, compared to the Street’s expectation of $3.99. The firm’s analysis suggests that productivity savings and the company’s restructuring program will not fully offset the inflation and pricing headwinds.
The research firm projects a 12% operating profit decline for fiscal year 2026, with 6% coming from the core business and an additional 6% resulting from the Yoplait divestiture.
TD Cowen expects General Mills’ valuation multiple to decrease toward levels more in line with food industry peers, as the company’s organic growth remains at or below competitors for a third consecutive year.
In other recent news, General Mills has been the subject of several significant developments. The company announced a $130 million cost-reduction plan aimed at enhancing productivity and streamlining operations, expected to be largely completed by the end of fiscal 2028. This initiative is part of a broader transformation effort to optimize operations amidst shifting consumer preferences. On the financial front, General Mills has faced a series of analyst downgrades and price target reductions. BofA Securities lowered its price target to $63, citing the impact of the upcoming U.S. yogurt business divestiture and reduced earnings expectations. Goldman Sachs also downgraded the stock to Neutral and reduced the price target to $58, reflecting concerns over cost pressures and limited upside potential. Citi adjusted its price target to $56, projecting a decline in operating profit for fiscal year 2026 due to various pressures, including brand investments and the yogurt business sale. Additionally, General Mills appointed Dana McNabb as the new Group President, expanding her leadership to include the North America Pet segment, a move aimed at capitalizing on growth in the pet food category. These recent developments indicate a period of strategic adjustments and financial recalibrations for General Mills.
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