Street Warms To General Mills After Q3 Beat

General Mills, Inc. GIS beat Wall Street estimates with its third-quarter report Wednesday, with revenue growth and margin expansion that had sell-side analysts raising target prices for the stock. 

The Analysts

• Credit Suisse analyst Robert Moskow maintanied a Neutral rating on General Mills and raised the target price from $43 to $52.
• Bank of America Merrill Lynch’s Bryan Spillane reiterated a Neutral rating and raised his price target from $45 to $49.
• Citi Research analyst David Driscoll reiterated a Buy rating on General Mills and raised the price target from $54 to $60. 
• BMO Capital Markets analyst Kenneth Zaslow maintained a Market Perform rating and lifted the target price from $51 to $53.

Credit Suisse

Pricing, productivity and breakfast cereal merchandising improvements can be credited for boosting gross margin significantly, Moskow said in a note. General Mills’ recently acquired Blue Buffalo pet food brand remains on track for double-digit top- and bottom-line growth for the year, he said. 

BofA 

The earnings beat supports the case that General Mills is making progress on sales and profit growth, and the company “has plenty of flexibility to deliver FY19 financial objectives,” Spillane said in a note. 

Citi

“GIS is successfully executing against its F19 priorities and remains on track for solid improvements,” Driscoll said in a note, adding that the company is Citi’s top pick in the U.S. food sector.

One note of caution: Citi lowered its 2019 revenue estimate because of expected sluggish North American retail sales, though Driscoll predicts strengthening in 2020.

General Mills is bullish on Blue Buffalo and expects a "big" fourth quarter and double-digit FY19 profit growth, the analyst said. 

BMO

BMO is increasing its 2019 outlook and target price for General Mills based on the company’s more upbeat forecast on operating profit growth and a favorable tax situation, Zaslow said in a note. The solid outlook is due to progress in processes such as innovation and financial modelling, he said. 

Price Action

General Mills shares were up 3.67 percent at $50.06 at the time of publication Thursday. 

Related Links:

Deutsche Bank Upgrades General Mills, Says Blue Buffalo Acquisition Underappreciated

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