RBC Capital Remains Positive on General Mills (GIS) Following Class 1 Recall

RBC Capital maintained an Outperform rating and $65.00 price target on General Mills (NYSE: GIS) following the company's reported voluntary Class 1 recall on Cheerios and Honey Nut Cheerios, due to wheat contamination.

Analyst David Palmer commented, "We believe that sales trends of original (yellow box) Cheerios and Honey Nut Cheerios have improved behind gluten-free news and marketing in the early weeks of fall. However, we now wonder to what extent the new gluten-free effort may have been set back with the Celiac community (1% of American consumers) and those seeking to avoid gluten in their diets (28% of Americans). Although the near term financial costs associated with the recall are unknown at this stage (e.g. repositioning, reimbursements, etc.), our greater concern lies with the potential impact to Cheerios brand momentum—both as a result of consumer trust and distraction with retail. Based on Nielsen data, we estimate Original Cheerios and Honey Nut Cheerios represent approximately 2% and 3.5% of US retail sales respectively."

For an analyst ratings summary and ratings history on General Mills click here. For more ratings news on General Mills click here.

Shares of General Mills closed at $57.22 yesterday.

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