Street Calls of the Week
Investing.com - UBS lowered its price target on General Mills (NYSE:GIS) to $47.00 from $49.00 on Thursday, while maintaining a Sell rating on the stock following the company’s fiscal first quarter results. The stock, currently trading near its 52-week low of $48.29, has declined over 20% year-to-date, according to InvestingPro data.
General Mills reported better-than-expected first quarter earnings, with approximately $0.03 of the beat attributed to timing factors that are expected to mostly reverse in the second quarter. Despite the earnings beat, the company kept its fiscal year 2026 guidance unchanged. InvestingPro data shows that six analysts have recently revised their earnings estimates downward for the upcoming period.
UBS analyst Peter Grom highlighted concerns about whether General Mills can achieve its projected organic growth acceleration later this fiscal year. The firm noted that second quarter growth will likely remain challenged, requiring more than 2% growth in the second half to reach the midpoint of company guidance.
The investment bank acknowledged that lapping of outsized trade expense accrual should provide a discrete boost of approximately 1 percentage point to second-half growth. However, UBS still considers the underlying business reacceleration assumption somewhat optimistic given current market trends and commentary from industry peers.
UBS expressed concern about General Mills’ valuation, noting the stock trades at more than 13 times revised next-twelve-months earnings per share, representing a premium to other center-store packaged food peers despite similarly challenged growth prospects. However, the company maintains a strong dividend profile, having maintained payments for 55 consecutive years with a current yield of 4.96%. Discover more insights about General Mills and access comprehensive analysis with a InvestingPro subscription, which includes additional ProTips and detailed financial metrics.
In other recent news, General Mills reported first-quarter earnings per share of $0.86, surpassing analyst estimates by $0.05, despite a 3% decline in organic sales. This earnings beat was noted by several analyst firms, including TD Cowen, which maintained its Hold rating and $48 price target. Stifel also reiterated its Buy rating with a $56 price target, attributing the earnings outperformance to timing factors expected to reverse in the second quarter. RBC Capital expressed optimism, maintaining an Outperform rating and a $63 target, highlighting improvements in the North America retail segment’s organic growth driven by price/mix factors. Mizuho, however, maintained a Neutral rating with a $57 target, pointing out mixed results and potential future volume pressures. Bernstein SocGen Group lowered its price target to $54 from $55, citing ongoing volume challenges despite aggressive pricing strategies. These developments reflect a range of analyst perspectives on General Mills’ financial performance and future outlook.
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