On Thursday, Stifel, a financial services firm, adjusted its outlook on General Mills (NYSE:GIS), reducing the stock's price target to $78 from $82 while sustaining a Buy rating. Currently trading at $63.91, near its 52-week low, InvestingPro analysis suggests the stock is slightly undervalued, with a P/E ratio of 14.34.
The revision follows General Mills' second-quarter fiscal year 2025 earnings report, which revealed a 12% rise in earnings per share (EPS) to $1.40, surpassing consensus estimates. The increase was primarily due to favorable inventory phasing, largely attributed to the timing of holidays, which is anticipated to revert in the latter half of the fiscal year.
General Mills, known for its portfolio of consumer food brands, has revised its full-year 2025 guidance downward, incorporating increased investment to maintain market share advancements and achieve sustainable growth.
Stifel has adjusted its EPS forecast for General Mills to $4.44, a slight decrease of $0.08, indicating a 2% decline for the year. Despite near-term challenges, the company maintains a strong dividend profile with a 3.76% yield and an impressive 54-year streak of consistent dividend payments, according to InvestingPro data.
For the second half of fiscal year 2025, an 8% decrease in operating profit is projected by Stifel, including a more pronounced 10% drop in the third quarter. This expected downturn is seen as a correction of the favorable second-quarter results, where timing benefits played a significant role in the company's performance.
Stifel's maintained Buy rating suggests confidence in General Mills' long-term prospects despite the anticipated short-term challenges. The firm's revised price target of $78 reflects the updated earnings expectations and the investments that General Mills plans to make in pursuit of continued market share and growth.
InvestingPro subscribers can access detailed financial health metrics, which currently show a "Good" overall score, along with 8 additional exclusive ProTips and comprehensive valuation analysis in the Pro Research Report.
In other recent news, General Mills has experienced significant financial developments, surpassing consensus estimates on both revenue and earnings in its second-quarter fiscal year 2025 results.
The company reported revenues of $5.24 billion, a 2.3% increase over analyst expectations, and organic sales growth of 1.0% year-over-year. However, General Mills revised its full-year 2025 guidance downwards, now forecasting organic sales at the lower end of the flat to 1% growth range.
Analysts have responded to these developments, with Bernstein SocGen Group revising its price target for General Mills to $68 from $69, maintaining a Market Perform rating, while Mizuho (NYSE:MFG), Citi, and Jefferies have maintained Neutral stances. Jefferies cut the target to $66 due to price concerns, whereas Stifel reaffirmed its Buy rating on General Mills, maintaining a price target of $82.
In the midst of these financial shifts, General Mills has also been linked to potential mergers and acquisitions that could dilute earnings per share by approximately 4%. These recent developments, along with shifts in the food and beverage sector, such as a downturn in Kraft Heinz (NASDAQ:KHC)'s stock following General Mills' lowered annual profit forecast, provide investors with a comprehensive view of the company's current financial landscape.
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