UPDATE: Morgan Stanley Downgrades General Mills to Underweight, $48.00 PT

In a report published Tuesday, Morgan Stanley analyst Pamela Kaufman downgraded General Mills, Inc.

to Underweight, with a $48.00 price target. According to the report, GIS US sales should continue to lag peers, and its guidance for ~10% EBIT growth in 2H14 may prove optimistic. “While Food investors have proven receptive to significant change, we see Mills' approach as more measured,” the report noted. “Its US EBIT/facility is already best-in-class, and core SG&A is leaner than diversified Food peers. Mills could surprise with robust cost reductions, buybacks, or acquisitions (2x leverage), but we generally expect the company to continue to pursue (and struggle to achieve) high-quality high single-digit EPS growth.” Some highlights from the report included: -”We forecast 2014e EPS of $2.85, or ~1% below the $2.88 consensus.” -”We see US sales trends range-bound at 1-2%, with below-average categories (even including yogurt) and mixed share trends (yogurt, meals).” -”We base our 12-month PT of $48 on ~15x C2015e EPS.” GIS closed Monday at $48.81.