Jefferies raised its price target on GIS and highlighted a focus on brand investments.
- General Mills Q4 revenue and earnings beat Wall Street estimates.
- Jefferies sees upside from higher brand investment and cost savings in fiscal 2027.
- The firm maintained a ‘Hold’ rating, citing weak consumer demand and expected compression in earnings and margins.
General Mills (GIS) stock looked set for a second straight week of gains after its stronger-than-expected fiscal fourth-quarter results boosted investor sentiment, with Jefferies pointing to the company's cost-saving initiatives and improving execution as key drivers.
GIS Brand Investment Strategy Gains Focus Amid Margin Pressure
Jefferies raised its price target on General Mills to $36 from $33 following the company's Q4 results. Revenue of $4.6 billion was in line with the analysts’ consensus estimates, and adjusted earnings of $0.95 exceeded Street’s estimate of $0.8, according to Fiscal AI data.
Looking ahead to fiscal 2027, Jefferies believes General Mills is moving away from relying primarily on pricing actions and instead plans to increase investment behind its brands. The firm said the company's guidance suggests upside if cost-saving initiatives deliver stronger-than-expected results.
Despite the potential upside, Jefferies remains cautious, citing weak demand across several product categories, continued pressure on consumer spending, and expectations of another year of lower earnings and profit margins, which are reasons to keep its Hold rating.
General Mills stock edged 0.6% lower overnight after recording its biggest single-day gain in over six years.
General Mills CEO Outlines Roadmap For Fiscal 2027
Speaking during the Q4 earnings call, General Mills Chairman and CEO Jeff Harmening told investors the packaged food company expects stronger financial performance through increased brand investment, operational efficiencies and disciplined capital allocation.
“We expect to deliver $3 billion in cumulative cost savings over the 4 years through fiscal 2030, primarily through our Holistic Margin Management productivity program and our global transformation initiative,” said Harmening.
According to Harmening, the anticipated savings will help offset inflationary costs while providing additional resources for growth investments.
Investors also welcomed evidence that demand may be stabilizing. North American retail operating profit improved over the course of the fiscal year, finishing with 7% growth after much steeper declines earlier in the year.
General Mills forecast organic net sales ranging from a 1.5% decline to 0.5% growth, suggesting consumer spending conditions will remain challenging.
What GIS Retail Traders Are Saying
On Stocktwits, retail sentiment around the stock jumped to ‘extremely bullish’ from ‘neutral’ territory the previous day, with a 466% increase in message volume in 24 hours.
A user said, “$GIS gapping 7.7% on the Q4 beat, targeting $3B in cost savings. Staples don't usually pop like this, but earnings moves in slow names tend to hold better than the momo junk.”
Another user said, “This has to be one of the most undervalued stocks around.”
GIS stock has declined by over 18% year-to-date.
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