UPDATE: Goldman Sachs Downgrades General Mills to Sell on Sales and Earnings Risk

Goldman Sachs downgraded General Mills (NYSE: GIS) from Neutral to Sell and lowered the price target from $42.00 to $40.00.Goldman Sachs commented, "We downgrade GIS to Sell from Neutral with a $40, 12-month price target for 4% downside vs. coverage at 6% upside, as we expect underperformance relative to our sector as EPS falls short of consensus on lower sales growth and reinvestment. We believe GIS has a product cycle issue with a US retail portfolio that appears over-extended. We believe either retailer- or manufacturer-led pruning is inevitable and likely to result in continued share losses. Data suggest that (1) this is under way in non-Greek yogurt and likely to impair its recovery in the yogurt category and (2) the cereal portfolio is at risk. We cut out-year estimates as a result but raise this year after the 2Q beat."General Mills closed at $41.60 on Thursday.