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Investing.com -- RBC Capital Markets raised its rating on General Mills (NYSE:GIS) to outperform from sector perform, saying the packaged-food maker’s lower earnings targets for fiscal 2026 now offer enough headroom to be met even if demand stays sluggish.
RBC lifted its price target to $63, about 25 % above current levels.
The firm highlighted the company’s latest quarter, in which organic sales in North America Pet rose 3 %, beating analysts’ expectations of a 2 % decline.
Retailers built inventory ahead of summer promotions, helping volume, and General Mills announced a national rollout of Blue Buffalo Love Made Fresh, its first entry into refrigerated pet food.
Management estimates the fresh-pet segment is worth roughly $3 billion today and could grow to $10 billion “over the next several years.”
While the launch will initially squeeze margins, RBC said the company’s experience handling chilled dough products should ease distribution challenges.
General Mills has signalled that shelf prices, especially in North America Retail, must fall further to reignite volume. RBC said that acknowledgement, alongside cost controls, is “a key pillar” of its more positive view.
For the February–April quarter, the maker of Cheerios cereal and Betty Crocker mixes reported adjusted earnings per share of $0.74, ahead of consensus $0.71, thanks to lighter selling, general and administrative expenses and lower interest and tax costs.
RBC still sees pressure on packaged-food valuations and said competition from private-label products is intense. But it believes General Mills’ recurring revenue base, high retention rates and modest leverage limit further multiple compression, describing the risk-reward profile as “relatively balanced” after the stock’s pullback.