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On Monday, Goldman Sachs analysts downgraded General Mills (NYSE: NYSE:GIS) stock from Buy to Neutral. The downgrade comes as analysts adjust their outlook on the company, citing limited upside potential in the near term due to rising cost pressures. According to InvestingPro data, the stock currently trades at 11.95x earnings and near its 52-week low of $52.39, while maintaining a notable 4.38% dividend yield.
The Goldman Sachs team also lowered the 12-month price target for General Mills shares to $58 from a previous target of $68. The adjustment reflects concerns over the company’s plans to reinvest any potential gains in fiscal year 2026 to support top-line growth. InvestingPro analysis reveals that General Mills has maintained dividend payments for an impressive 55 consecutive years, demonstrating long-term financial stability despite current challenges. Get access to 8 more exclusive InvestingPro Tips and comprehensive analysis with a subscription.
Goldman Sachs analysts noted that while there is still potential for General Mills to return to a long-term organic sales growth target of 2-3% by fiscal year 2027, they choose to take a more cautious stance. The decision is based on the need for further evidence of recovery and a more balanced risk/reward scenario.
The analysts highlighted the importance of considering a broader range of valuations should the anticipated recovery not materialize. They expressed the view that the company’s strategy may take time to yield tangible results.
General Mills shares have been under scrutiny as the company navigates these challenges, with revenue declining 2.62% in the last twelve months. The market will be closely watching the company’s performance and strategic decisions in the coming months, particularly with the next earnings report due on June 25. Discover detailed Fair Value analysis and comprehensive research reports for General Mills and 1,400+ other stocks with InvestingPro.
In other recent news, General Mills has announced a $130 million cost-reduction plan aimed at driving productivity and streamlining operations, with expectations to complete the initiative by fiscal 2028. The company plans to record approximately $70 million in charges in the fourth quarter of fiscal 2025, primarily related to severance expenses. Additionally, General Mills has promoted Dana McNabb to oversee both the North America Retail and Pet segments, reflecting a strategic focus on the growing pet food industry. In the realm of analyst activity, Citi has revised its price target for General Mills to $56, down from $57, due to projected declines in operating profit for fiscal year 2026. UBS has initiated coverage with a Sell rating and a $54 price target, citing potential sales challenges and financial headwinds. Meanwhile, the FDA’s decision to phase out synthetic dyes from the U.S. food supply will affect General Mills, among other food companies, as they transition to natural alternatives. These developments highlight the ongoing changes and challenges that General Mills faces in the current market landscape.
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