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On Thursday, RBC Capital Markets adjusted its outlook on General Mills shares (NYSE:GIS), reducing the price target to $67 from the previous $70, while retaining a Sector Perform rating on the stock. The adjustment follows General Mills’ latest quarterly earnings report, which highlighted challenges within the packaged food sector. According to InvestingPro data, 12 analysts have recently revised their earnings estimates downward for the upcoming period, though the company remains profitable over the last twelve months.
Nik Modi, an analyst at RBC Capital, pointed out that General Mills experienced a difficult quarter, which was anticipated. The company’s results reflected the current tough operating conditions in the packaged food industry. According to Modi, consumers are increasingly looking for better value, and retailers are managing their inventories more strictly. These market dynamics have compelled General Mills to invest more in pricing strategies and marketing, which has put a strain on the company’s profitability. Despite these challenges, InvestingPro data shows the company has maintained dividend payments for 55 consecutive years and has raised its dividend for the past 5 years, demonstrating long-term financial stability.
Furthermore, General Mills has revised its financial forecasts downward for the fiscal year 2025, with a particularly significant reduction in its earnings per share (EPS) projections. This is attributed to the company’s commercial investments that are being made in preparation for product launches planned for fiscal year 2026.
Modi’s commentary emphasized the impact of these strategic decisions on General Mills’ financial outlook. "GIS lowered both top and bottom line FY’25 guidance, but the cut to EPS was quite notable given commercial investments ahead of FY’26 launches," he explained.
Despite the reduction in the price target, RBC Capital has decided to maintain its Sector Perform rating for General Mills stock. The new price target of $67, down from $70, reflects the analyst’s revised expectations in light of the company’s recent performance and future investment plans.
In other recent news, General Mills reported its third-quarter fiscal 2025 earnings, exceeding expectations with an earnings per share (EPS) of $1.00, compared to the forecasted $0.98. However, the company’s revenue fell short, coming in at $4.8 billion against a forecast of $4.99 billion. In response to these results, several financial firms have adjusted their outlook on General Mills. Bernstein reduced its price target from $68.00 to $62.00, maintaining a Market Perform rating, citing a top-line miss and changing consumer behaviors as key challenges. Mizuho (NYSE:MFG) also lowered its price target to $60 from $62, while maintaining a Neutral rating, highlighting weaker sales in the snacks category and inventory reductions at retailers. Barclays (LON:BARC) followed suit, cutting the price target from $65.00 to $60.00, but kept an Equalweight rating, noting General Mills’ increased trade and media spending to enhance consumer value. Despite these challenges, Stifel maintained a Buy rating on the stock, with a steady price target of $65.00, expressing confidence in the company’s strategic investments for future growth. These recent developments reflect the evolving market conditions and strategic adjustments being made by General Mills.
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