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Investing.com - Jefferies lowered its price target on General Mills (NYSE:GIS) to $51.00 from $53.00 on Wednesday, while maintaining a Hold rating on the food manufacturer’s stock. The stock, currently trading near its 52-week low at $50.68, has seen 5 analysts revise their earnings estimates downward for the upcoming period, according to InvestingPro data. Despite the recent price weakness, InvestingPro analysis suggests the stock is currently undervalued based on its proprietary Fair Value model.
The research firm acknowledged General Mills’ fiscal 2026 guidance indicates the company is working to improve demand and increase competitiveness in the market. Jefferies noted that management is taking proactive steps by being among the first of its peers to reduce prices, recognizing consumer budget constraints in grocery spending. The company’s efforts come as it faces revenue decline of 2.62% in the last twelve months, though it maintains a solid market position with a $27.87 billion market capitalization.
General Mills’ strategy includes a combination of increased innovation, productivity-driven price adjustments (PPA), and higher media spending, according to Jefferies. These initiatives are part of the company’s broader goal to return to volume-led growth after recent challenges. InvestingPro data shows the company maintains strong shareholder returns with a 4.49% dividend yield and an impressive 55-year streak of consecutive dividend payments. Want deeper insights? InvestingPro offers 8 additional key tips and comprehensive analysis for GIS.
The firm credited General Mills management for recognizing the need to address pricing concerns as consumers remain financially stretched when it comes to grocery budgets. Despite these positive steps, Jefferies maintained its Hold rating on the stock.
Consumer response to these initiatives remains "the great unknown" according to Jefferies, suggesting uncertainty about whether General Mills’ strategic adjustments will successfully drive the desired volume growth in the coming fiscal year.
In other recent news, General Mills reported its fiscal fourth-quarter 2025 earnings, showcasing an earnings per share (EPS) of $0.74, which surpassed the forecast of $0.71. The company’s revenue stood at $4.6 billion, aligning with expectations. Despite the positive earnings surprise, General Mills’ stock experienced a decline due to investor concerns about strategic reinvestments. The company has plans for significant investments in its Fresh Pet food line, aiming to expand this segment from $3 billion to $10 billion over the next decade. Analysts from firms like JPMorgan and Barclays (LON:BARC) have raised questions about the margin potential and strategic reinvestments, highlighting the company’s focus on volume growth in North America Retail. General Mills has set organic sales growth guidance between -1% and +1%, reflecting a cautious outlook. The company is also expected to see its SG&A expenses grow faster than the top line as it reinvests in brand development.
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