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Investing.com - Bernstein SocGen Group lowered its price target on General Mills (NYSE:GIS) to $55.00 from $62.00 on Thursday, while maintaining a Market Perform rating on the food manufacturer’s stock. The company, currently trading at $51.79 with a P/E ratio of 11.17x, is showing signs of being undervalued according to InvestingPro analysis, which identifies several positive indicators including an attractive 4.74% dividend yield.
The research firm cited ongoing category headwinds that could intensify before improving, with no mention of GLP-1 weight loss drugs or potential regulatory changes during the company’s recent earnings call. Bernstein believes weight loss medications are significantly impacting consumer eating behaviors, particularly reducing snacking and shifting preferences from carbohydrates to proteins. This pressure is reflected in General Mills’ recent performance, with revenue declining 1.87% in the last twelve months.
Bernstein noted that pill versions of GLP-1 drugs are expected to enter the market in early 2026, potentially worsening pressures on food companies like General Mills before conditions might improve in 2027-2028. The firm’s analysis suggests these medications are affecting food categories throughout grocery stores, alongside the value-seeking behavior that the industry has identified.
The research firm also highlighted new regulatory challenges, including Texas’s plans to require special labeling for foods containing any of over 40 additives that are banned in other countries. Several antioxidants and preservatives on this list may be difficult for General Mills to replace with alternative ingredients.
General Mills provided guidance for fiscal year 2026 that fell below consensus expectations, according to Bernstein, which acknowledged the company is "stepping up its execution to reinvigorate top-line growth" despite the challenging environment. Despite these challenges, InvestingPro data shows the company has maintained dividend payments for 55 consecutive years, demonstrating long-term financial stability. For deeper insights into General Mills’ financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, General Mills reported a decline in organic sales by 3% and an earnings per share (EPS) of $0.74 for the fourth quarter, marking a 27% decrease on a constant currency basis. Despite this, Stifel noted the EPS exceeded their estimates by $0.05 due to favorable inventory timing in the North America Pet business. General Mills has provided guidance for fiscal year 2026, projecting an EPS decline between 15% and 10%, with a focus on increased reinvestment to improve volume performance. Analyst firms have adjusted their price targets for General Mills, with Evercore ISI and Barclays (LON:BARC) both lowering their targets to $54, citing various factors including organic sales performance and fresh pet food initiatives. Stifel and BofA Securities also lowered their price targets to $56 and $61, respectively, while maintaining positive outlooks on the company’s long-term growth potential. Mizuho (NYSE:MFG) maintained its $60 price target and Neutral rating, noting modest EPS upside and improvements in market share. Barclays highlighted General Mills’ national fresh pet food launch under the Blue Buffalo brand as a significant development, supported by multi-year investments. Analysts express varying degrees of optimism about General Mills’ future performance, with concerns about execution risks and price competition being common themes.
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