JPMorgan downgrades General Mills stock to Underweight on growth concerns

Investing.com - JPMorgan downgraded General Mills (NYSE:GIS) from Neutral to Underweight on Wednesday, while lowering its price target to $45.00 from $53.00. The stock, currently trading at a P/E ratio of 12.09 and near its 52-week low, has seen 11 analysts revise their earnings expectations downward for the upcoming period, according to InvestingPro data.

The downgrade comes amid concerns about General Mills’ earnings outlook and recent guidance track record. JPMorgan noted the company’s disappointing fiscal year 2026 outlook in the fourth quarter of 2025, which followed consecutive guidance cuts in the second and third quarters of fiscal year 2025. Despite these challenges, the company maintains a strong dividend profile with a current yield of 4.89% and has maintained dividend payments for 55 consecutive years.

The investment bank expressed skepticism about potential top-line growth rebounds, citing the historically low growth of General Mills’ North America Retail segment, the recent divestiture of its higher-growth yogurt business, and ongoing industry-wide challenges in the dog food category.

Despite operational struggles and a deteriorating balance sheet, JPMorgan pointed out that General Mills shares continue to trade at approximately a 2x premium to its low-growth food peers on calendar 2026 estimated P/E and EV/EBITDA metrics.

While acknowledging the already negative market sentiment and management’s proactive investments to improve top-line trends, JPMorgan concluded that the overall setup for General Mills remains challenging. InvestingPro’s Fair Value analysis suggests the stock may be slightly undervalued at current levels, with additional insights available in the comprehensive Pro Research Report covering this consumer staples giant.

In other recent news, General Mills has completed the sale of its U.S. yogurt business to Lactalis. This transaction includes well-known brands such as Yoplait, Go-Gurt, Oui, Mountain High, and :ratio, along with manufacturing facilities in Tennessee and Michigan. The company’s fourth-quarter fiscal 2025 earnings report has prompted several analyst updates. UBS has lowered its price target for General Mills to $49, citing a weak fiscal 2026 outlook that fell below Wall Street expectations, with a notable decline in earnings per share projected. Bernstein has also adjusted its price target to $55, mentioning category headwinds that may worsen before improving. Evercore ISI reduced its target to $54, reflecting updated cash flow analyses. Meanwhile, Stifel has reiterated its Buy rating and maintains a $56 price target following discussions with General Mills’ leadership. These developments highlight the mixed analyst sentiment surrounding General Mills’ recent financial performance and strategic decisions.

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