Skip to main content

Market Overview

UBS On General Mills' Analyst Day: 'More Questions Than Answers'

Share:
UBS On General Mills' Analyst Day: 'More Questions Than Answers'

General Mills, Inc. (NYSE: GIS) hosted its Analyst Day on July 13, and focused on portfolio segmentation and margin targets, UBS’s Steven Strycula said in a report. He maintained a Neutral rating on the company, with a price target of $71.

General Mills had raised its op margin target to 20 percent by FY18. The company indicated that it would focus on segmenting its portfolio into growth brands and foundational brands.

Take On Margin Target

Kraft Heinz Co (NASDAQ: KHC) had demonstrated that with the right cost discipline, US Food companies could operate at a much higher margin level.

Analyst Steven Strycula commented, however, that General Mills did not seem ready to “fully deliver or attempt KHC’s margin focus.” He expects the company to be able to achieve op margin of about 19.5 percent by FY18 to reflect “larger than anticipated reinvestment risks in categories where branded competition is stiff (yogurt, cereal, snacks, soup).”

Related Link: Morgan Stanley Raises General Mills' Price Target On Margin Improvements

Take On Valuation

Although General Mills “deserves credit” for increasing the pace of change, with shares are trading at decade-high multiples, the stock already seems to have “priced for accelerated margin savings,” leaving little upside, unless the company is able to deliver revenue growth ahead of consensus expectations, Strycula mentioned.

Did you like this article? Could it have been improved? Please email feedback@benzinga.com to let us know!

Latest Ratings for GIS

DateFirmActionFromTo
Mar 2021Credit SuisseMaintainsOutperform
Mar 2021Credit SuisseMaintainsOutperform
Jan 2021Credit SuisseMaintainsOutperform

View More Analyst Ratings for GIS
View the Latest Analyst Ratings

 

Related Articles (GIS)

View Comments and Join the Discussion!

Posted-In: Steven Strycula UBSAnalyst Color News Reiteration Events Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
GIKColliers SecuritiesInitiates Coverage On14.0
SANWLake StreetInitiates Coverage On6.0
LILAMorgan StanleyDowngrades15.0
BEJP MorganUpgrades36.0
NEXACredit SuisseUpgrades11.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com