Shares of General Mills Inc. (NYSE:GIS) remained under pressure on Thursday, despite the company’s upbeat fiscal fourth-quarter earnings report on Wednesday.
The announcement came amid an exciting earnings season. Here are some key analyst takeaways.
RBC Capital Markets On General Mills
Analyst Nik Modi upgraded the rating from Sector Perform to Outperform, while reducing the price target from $67 to $63.
General Mills reported North America Pet segment organic growth of 3%, ahead of Street expectations of a decline of 2%, Modi said in the upgrade note. For the first time, management indicated plans to enter the fresh pet food segment through the planned launch of Blue Buffalo Love Made Fresh in the second half of the year, he added.
Although General Mills' fundamentals have yet to fully recover, the full-year earnings guidance "embeds enough cushion" for the company to meet its delivery targets, despite the ongoing sluggish environment, the analyst stated. "We are also encouraged by management’s acknowledgment that prices need to come down further," he wrote.
Check out other analyst stock ratings.
Stifel On General Mills
Analyst Mathew Smith reiterated a Buy rating, while cutting the price target from $65 to $56.
General Mills reported "a slightly stronger fourth quarter," with earnings of 74 cents per share, "primarily driven by favorable inventory timing in its North America Pet business," Smith said. Management's full-year guidance includes a decline in earnings in the range of -15% to -10%, "with a heavier burden from reinvestment than we anticipated," he added.
The higher investment is required to improve General Mills' volumes and ability to "sustainably grow both organic sales and profit," the analyst stated. The company's volume share performance is improving "where investments have taken hold," he further wrote.
GIS Price Action: Shares of General Mills declined by 0.36% to $50.50 at the time of publication on Thursday.
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