UPDATE: Credit Suisse Reiterates Neutral Rating, Raises PT on General Mills
In a report published Friday, Credit Suisse Group reiterated its Neutral rating on General Mills (NYSE: GIS), and raised its price target from $42.00 to $44.00.
Credit Suisse noted, “General Mills reported a 2Q13 EPS beat of $0.86, above consensus of $0.79 and $0.76 the prior year. But the stock dipped on the day because management only raised EPS guidance by $0.01 and caused some concerns about earnings quality by guiding down ‘core' sales growth by 2% and lowering advertising spending. Despite these concerns, we think the stock will go modestly higher in the coming quarter on positive revisions to EPS. Volume and gross margin are improving slowly, ingredient inflation is under control, and the company has $60 million in savings from administrative restructuring to play with. There could be some valuation multiple expansion on the horizon as well if management provides better visibility into a recovery in core sales trends (especially U.S. yogurt) and earnings accretion from acquisitions. But that is a lot to ask for when consumer spending trends remain so weak.”
General Mills closed on Thursday at $41.57.
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