General Mills Downgraded On Concerns That Yogurt Declines Will Hurt Earnings Growth

By Tonya Garcia Markets MarketWatch Pulse

General Mills Inc. was downgraded Thursday to sector perform from outperform at RBC Capital Markets on concerns that declines in the company's yogurt business will hurt earnings growth. The company's price target was lowered to $69 from $73. General Mills brands include Yoplait and Liberte. General Mills sales fell in the most recent quarter on slumping sales of its yogurt brands. The company announces second-quarter earnings on Tuesday. RBC analysts add yogurt to a list of categories, including cereal, where sales have slipped. "While it is conceivable that cereal can return to growth, the recent deterioration in yogurt has been concerning - especially since it has coincided with lower competitive price pressure," RBC wrote. "We now believe it is unlikely that General Mills will meet its full-year FX-neutral global sales growth target of flat to down 2%." General Mills shares are down 0.3% in premarket trading, but up 9% for the year to date. The S&P 500 index is up 10.2% for 2016 so far.

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