General Mills Downgraded to Neutral, Pet Unit Falls 4% and Target Cut to $48
BofA Securities analyst Peter T. Galbo downgraded General Mills to Neutral from Buy, cutting his price target to $48 from $55 and valuing shares at 14x fiscal 2027 EPS versus 16x. The Blue Buffalo pet unit fell 4% in fiscal 2024 and inventories will weigh on results through fiscal 2026.
1. BofA Downgrade and Valuation Cut
BofA Securities analyst Peter T. Galbo downgraded General Mills from Buy to Neutral and lowered his price target to $48 from $55. He now values the stock at 14 times fiscal 2027 EPS, down from a prior 16x multiple, reflecting a weaker growth outlook.
2. Extended Recovery Timeline
Galbo extended the expected recovery timeline, forecasting limited volume and sales growth over the next year. He anticipates topline stabilization may not occur until the second half of fiscal 2027, driven by slow consumer spending and cost pressures.
3. Pet Segment and Inventory Challenges
The Blue Buffalo pet segment declined 4% year over year in fiscal 2024, and ongoing inventory issues are expected to drag on results through fiscal 2026. Management’s turnaround for the Wilderness sub-brand has also fallen short of expectations.
4. Analyst Sentiment and Price Targets
Several peers including Bernstein, Morgan Stanley, TD Cowen, Barclays, Evercore ISI and Wells Fargo maintained neutral-equivalent ratings while trimming targets. Stifel cut its target to $50 and Piper Sandler to $53, but both kept Buy and Overweight ratings respectively.