Shares of General Mills were upgraded to Buy from Neutral at UBS.
Daniel Acker/Bloomberg
General Mills
has underperformed against other large-cap stocks and UBS analysts called the stock’s level an “attractive entry point” for investors.
UBS analyst Cody Ross raised his recommendation on
General Mills
(ticker: GIS), the owner of Betty Crocker, Nature Valley, Blue Buffalo and Pillsbury brands, to Buy from Neutral and increased his price target to $88 from $85. Ross said he sees potential for margin recovery within the company’s pet segment.
“There is growing concern among investors we speak with that additional pet food supply will put downward pressure on pricing power, thus lowering the rate of sales growth and potentially rebasing margins,” the analyst wrote in a research note.
But, he added, that he thinks the “bear narrative is overdone,” noting room for growth within the premium segment of dog food since General Mills only holds a third of market share.
As more consumers shop online, and a subsection of them purchase more expensive food, premium dog food “supply will likely be absorbed by the demand,” the analyst added.
Shares of General Mills (ticker: GIS) rose1.1% to $77.63 on Friday. The stock has fallen 7.4% this year.
Write to Emily Dattilo at emily.dattilo@dowjones.com
Credit: marketwatch.com