Shares of Kellogg Co. (K) jumped out of the gates Thursday, climbing 4.33%. What drove the gain? The company beat on earnings per share and revenue estimates for second-quarter earnings.
Kellogg shares are up another 90 basis points to $70.99 in Friday's pre-market trading session after some positive analyst commentary. Despite Thursday's rally, shares are still down about 3.76% so far for 2017 and the dividend yield is just above 3%. However, analysts at JPMorgan are turning optimistic, upgrading the stock to overweight from neutral.
Analyst Ken Goldman also raised his price target to $78 from $76. Given the most recent closing price of $70.36, the $78 target implies about 11% upside. When combined with the 3% dividend yield, that's a hearty return for investors.
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"This is the first time we have been Overweight K in over five years," Goldman wrote in his research note. Goldman views Street-consensus margin estimates as too low and while concerns linger over the food market, finds Kellogg's risk-reward as attractive.
Although analysts expect sales to contract 2.7% this year, earnings estimates still call for 5.1% growth in fiscal 2017. Next year, sales are forecast to fall 0.3%, but earnings estimates call for 7.4% growth.
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