RBC maintains General Mills stock with $70 target, sees tough Q3

On Monday, RBC Capital Markets maintained its Sector Perform rating on General Mills stock (NYSE:GIS) with a price target of $70.00. The firm’s analysis suggests a challenging third quarter for the company, influenced by various factors affecting the packaged food industry. According to InvestingPro data, the stock has declined nearly 9% in the past week and currently trades at a P/E ratio of 13, reflecting market concerns.

The RBC Capital Markets analyst pointed out that General Mills is likely to echo the difficulties faced by the broader packaged food sector. The firm’s cautious stance on the company’s fiscal third quarter 2025 results is based on inventory issues with retailers and negative signals from competitors. These concerns are compounded by wider economic and political instability, which is further unsettling consumers. InvestingPro analysis reveals that 11 analysts have recently revised their earnings estimates downward, while the company maintains a solid financial health score of "GOOD."

RBC Capital has revised its estimates for General Mills’ organic growth downward to -3.1%, compared to the consensus of -2.7%. Additionally, the firm has aligned its earnings per share (EPS) estimate with the consensus at $0.96. The analyst believes that given the anticipated soft performance in the third quarter, General Mills may need to lower its organic growth guidance for the fiscal year. Consequently, RBC Capital feels more confident at the lower end of the current EPS guidance range.

The report concludes by reiterating the expectation that General Mills will confirm the tough operating conditions in the packaged food industry during its upcoming earnings disclosure. This outlook reflects the broader challenges that companies in this sector are currently facing.

In other recent news, General Mills has announced a leadership change in its North America Pet segment, with Liz Mascolo set to take over as Segment President starting in March 2025. This follows the planned retirement of Jon Nudi, who has been credited with driving significant improvements in the company’s performance. Meanwhile, Jefferies has raised General Mills’ stock price target to $62, maintaining a Hold rating, despite noting potential challenges in the upcoming fiscal third-quarter earnings report. These challenges include a decline in retail sales trends and timing shifts related to Thanksgiving.

Additionally, Citi has cut its price target for General Mills to $58, expressing concerns over potential risks to sales and earnings, particularly in the North America Retail and Pet segments. The upcoming sale of the U.S. yogurt business is also expected to impact Organic Sales Growth. In product news, General Mills is expanding into the ramen noodle market with new flavors inspired by its Old El Paso and Totino’s brands, available at Walmart (NYSE:WMT) starting in April.

Furthermore, Health and Human Services Secretary Robert F. Kennedy Jr. has urged General Mills and other food companies to eliminate artificial dyes from their products. This call to action is part of a broader initiative to improve health standards in the food industry. These developments highlight the company’s ongoing strategic efforts and challenges in a competitive market.

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