Susquehanna analyst Pablo Zuanic issues a Neutral rating on General Mills (GIS -0.7%) and sees shares trading flat for the short term.
Price target breakdown: "We think stocks with below average top line momentum and mixed track record re cost savings (in regards to how much flows to the bottom line) should trade at a discount to peers. So if we take a 5% peer discount to value GIS (on our apples to apples framework), this yields a price target by Dec’16 of $61."
If there is a positive case to be made on GIS, Zuanic points to "astute innovation" from the company leading to market gains and higher margins. A takeover by either Nestle or 3G is also a possibility.
Downside risks include share losses across categories and PE compression due to soft category trends.