Wall Street sentiment toward General Mills Inc. (NYSE:GIS) is becoming cautious. A leading analyst has downgraded the stock, reduced his price target and extended the expected recovery timeline. Several others share this outlook.
• What are GIS shares doing today?
Below is an overview of the factors behind this shift and its implications for investors.
BofA Downgrade Details
BofA Securities analyst Peter T. Galbo downgraded General Mills to Neutral from Buy and lowered his price forecast to $48 from $55, citing a slower-than-expected recovery across key segments.
The analyst now values the shares at 14 times his 2027 earnings per share estimate, down from a prior 16x multiple, reflecting a reduced growth outlook. The revised target implies approximately 7.6% upside from current levels.
Galbo revised his rating after management's CAGNY presentation, where the company detailed its recovery strategy. He noted that his previous Buy rating from December 2024 relied on a rebound in the Pet segment and stabilization in North America Retail, neither of which has yet occurred.
Recovery Timeline Extended
While the company has gained market share, overall volume is still under pressure. Consumer spending, especially among low- and middle-income households, is recovering more slowly than expected.
Galbo noted that these conditions have increased the cost of generating additional volume. He expects limited volume and sales growth over the next year, with possible topline stabilization in the second half of fiscal 2027.
North America Retail performance remains inconsistent. Guidance suggests second-half results may show no improvement or only modest gains. Management has adjusted base pricing for about two-thirds of its portfolio to close price gaps and boost competitiveness, while continuing to focus on its "remarkability framework."
The Blue Buffalo Pet segment remains challenged, down 4% year over year in fiscal 2024. Inventory issues are expected to weigh on results through fiscal 2026 and the Wilderness sub-brand turnaround has lagged expectations. Without renewed growth in Pet, Galbo expects the company's valuation multiple to fall in line with food industry peers.
Galbo maintained his updated financial model after last week's presentation, with no further estimate changes. His fiscal 2028 projections remain below the company's long-term organic sales and adjusted EPS goals.
Analysts Lower Targets
Additionally, several analysts lowered their price targets on General Mills while maintaining their existing ratings, reflecting a more cautious near-term outlook. Bernstein, Morgan Stanley, TD Cowen, Barclays, Evercore ISI and Wells Fargo reiterated neutral-equivalent ratings, while Morgan Stanley remains Underweight.
Stifel and Piper Sandler maintained more bullish stances with Buy and Overweight ratings, but lower price target: $50 from $52 for Stifel, $53 from $60 for Piper Sandler.
GIS Price Action: General Mills shares are trading higher by 0.92% at $45.03 at publication on Monday.
Photo: T. Schneider via Shutterstock
