On Thursday, Bernstein SocGen Group revised its price target for General Mills (NYSE: NYSE:GIS) shares, decreasing it to $68 from the previous $69, while maintaining a Market Perform rating. Currently trading at $63.91, near its 52-week low, the stock maintains a modest P/E ratio of 14.3 and offers a 3.76% dividend yield.
According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value assessment. The adjustment follows General Mills' second-quarter fiscal year 2025 results, which surpassed consensus estimates on both revenue and earnings. 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.
This growth was partially attributed to a 1.5 percentage point benefit related to timing, which exceeded the anticipated -1.0%. With a market capitalization of $35.29 billion and an overall Financial Health score rated as GOOD by InvestingPro, which offers comprehensive analysis through its Pro Research Reports covering 1,400+ US stocks.
Despite the positive performance in the second quarter, General Mills revised its full-year 2025 guidance downwards. Organic sales are now forecasted to be at the lower end of the flat to 1% growth range, which is below the consensus projection of 0.4%.
Adjusted earnings before interest and taxes (EBIT) are expected to decline between 4% and 2% in constant currency terms. This includes a 3 percentage point negative impact in the second half of the fiscal year due to the reversal of timing-related benefits seen in the second quarter.
Moreover, the company anticipates a 3 percentage point drag from growth investments and a 2 percentage point impact from increased incentive compensation. Notably, InvestingPro data reveals the company has maintained dividend payments for 54 consecutive years, demonstrating strong financial stability despite short-term challenges.
The rationale behind the revised price target is grounded in a reduction of the estimated EBITDA multiple from 11.5 times to 11.3 times. This change reflects concerns over the penetration of GLP-1 and policy changes anticipated from the incoming administration.
The Market Perform rating indicates that the analyst does not expect the stock to outperform the average total return of the stocks in the analyst's coverage universe over the next 12 to 24 months. For deeper insights into General Mills' valuation metrics and additional ProTips, investors can access the comprehensive analysis available on InvestingPro.
In other recent news, General Mills has been experiencing significant financial developments. The company reported better-than-expected second quarter earnings, with an adjusted earnings per share of $1.40 and a 2% year-over-year revenue increase to $5.2 billion. However, the company adjusted its full-year outlook, now projecting a 2-4% decline in its adjusted operating profit due to increased promotional investments and other anticipated challenges.
Analysts from Mizuho (NYSE:MFG), Citi, and Jefferies have maintained Neutral stances on General Mills, with Mizuho and Citi setting price targets at $72 and $67 respectively, while Jefferies cut the target to $66 due to price concerns. On the other hand, Stifel reaffirmed its Buy rating on General Mills, citing strong operating profit growth and 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 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, form the recent developments around General Mills.
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