General Mills Raising The Bar For U.S. Food

Courtesy of Benzinga.

According to a Citi note Thursday morning, General Mills, Inc (NYSE: GIS) has raised a bar in U.S. food which “comes around perhaps once (if at all) in an investor’s lifetime.”

Part of this bullish commentary came from the upsized savings target announced in fourth-quarter report, which should lead to “significant” operating margin potential. Here are the reasons why General Mills has more room to go in Citi’s eyes.

The Citi analyst said the $350 million of annual cost savings was far ahead of the projected $285-$310 million range given for the year. Along with the continued savings, Citi highlighted a definitive framework to invest in “growth” and “foundation” segments over the next two years. As for the plans themselves, foundation investment should drag the top-line figures over the near term, but long-term expectation for stable growth, according to Citi’s view.

Given the multiple levers of cost savings, investment, and improving margin, Citi reiterated a Buy rating and increased the price target on General Mills from $72 to $76.

General Mills shares finished Thursday’s trading sesssion up 5.1 percent at $71.32.

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