General Mills (NYSE:GIS) saw its price target increased to $72.00 from $69.00 by Mizuho, while the firm maintained a Neutral stance on the stock. The adjustment comes in the wake of General Mills' first-quarter performance, which featured positive developments such as increased food-at-home demand and market share gains in six of its top 10 North American Retail categories.
Additionally, the company reported its first volume growth in six quarters within its Pet segment.
Mizuho's decision to raise the price target is underpinned by a narrowing gap between productivity savings and cost inflation expected to persist throughout fiscal year 2025.
The firm also notes the continuation of rational retail pricing across General Mills' categories, bolstering confidence that the company may reach the higher end of its guidance for the fiscal year. As a result, Mizuho has also revised its FY25 earnings per share (EPS) estimate slightly upward to $4.55 from $4.51.
The firm's analysis indicates that General Mills' shares have experienced significant growth, outpacing broader market trends. Since July 1, General Mills' stock has surged by approximately 19%, compared to a 10% increase in the Consumer Staples Select Sector SPDR Fund (XLP) and a 3% rise in the S&P 500.
Despite these positive indicators, Mizuho suggests that the recent strength in General Mills' shares, driven by market rotation, may limit further upside as the company's fundamentals continue to improve. The firm's maintained Neutral rating reflects this cautious outlook on the stock's near-term growth potential.
General Mills has been making notable strides in its business operations. The company's first-quarter sales and earnings per share for fiscal year 2025 exceeded consensus estimates, with Goldman Sachs (NYSE:GS) raising its price target for the company's stock from $76.00 to $81.00, maintaining a Buy rating.
General Mills also sold its North American Yogurt business to French dairy companies Lactalis and Sodiaal for $2.1 billion. This move is projected to dilute General Mills' adjusted earnings per share by 3 percent in the first 12 months post-closure, excluding one-time impacts and transaction costs. Despite this, Mizuho has reaffirmed its neutral stance on General Mills shares.
In addition, General Mills has appointed Asheesh Saksena as Chief Strategy & Growth Officer and is considering potential mergers and acquisitions in the $1 billion to $1.5 billion range.
InvestingPro Insights
With General Mills' (NYSE:GIS) recent performance catching the eye of investors and analysts alike, InvestingPro data provides further insight into the company's financial health and market position. As of the last twelve months ending Q4 2024, General Mills boasts a market capitalization of $41.69 billion and a Price to Earnings (P/E) ratio of 15.4, which is adjusted for the period, indicating a potentially more attractive valuation compared to the unadjusted P/E ratio of 17.74. The company's commitment to shareholder returns is evident with a dividend yield of 3.2% and a notable 11.11% dividend growth during the same period. Furthermore, General Mills has been trading near its 52-week high, with the price at 98.83% of this peak.
InvestingPro Tips underscore the strategic moves by management, highlighting that General Mills has been aggressively buying back shares and has successfully raised its dividend for 4 consecutive years. Additionally, the company has maintained dividend payments for an impressive 54 years in a row. These factors, combined with the positivity of 5 analysts revising their earnings upwards for the upcoming period, suggest a robust outlook for General Mills. For those seeking more detailed analytics, InvestingPro offers additional tips on the company's financials and performance forecasts.
These insights and tips, particularly the share buybacks and consistent dividend growth, align with Mizuho's raised price target and the firm's recognition of General Mills' volume growth and market share gains. The InvestingPro platform lists even more tips for investors who are interested in a deeper dive into General Mills' prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.