Kellogg Company K is likely to generate only modest earnings growth in fiscal 2022, as it emerges from supply chain constraints, rising costs, and “uncertainty related to sustainability of consumer demand in the face of higher prices,” according to BofA Securities.
The Kellogg Analyst: Bryan Spillane downgraded the rating for Kellogg from Buy to Neutral, while lowering the price target from $76 to $70.
The Kellogg Thesis: The prospects are limited the company’s shares to move meaningfully higher in fiscal 2022, Spillane said in the downgrade note.
“We forecast 2% organic sales growth and 1.9% operating profit growth with gross margin contracting 30bps in 2022,” the analyst wrote.
“We believe a multiple slightly below peers is justified given near-term sales and margin pressures offset by a clean balance sheet,” he added.
K Price Action: Shares of Kellogg had risen by 0.81% to $65.84 at the time of publication Wednesday.
Related Link: Kellogg's Workers End Strike, Union Says No Concessions Were Made
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