Kellogg (K) PT Lowered to $66 at Piper Sandler on Higher Costs

Piper Sandler analyst Michael Lavery lowered the price target on Kellogg (NYSE: K) to $66.00 (from $67.00) while maintaining a Neutral rating expecting higher costs from inflation and the 1,400 striking workers at its US cereal plants.

The analyst stated "The strike hasn't yet appeared to disrupt supply, but it likely adds costs near-term (high cost temps, with bonuses), and potentially longer-term. We do not know precise incremental costs, but lower our 21E EPS from $4.15 to $4.05 on lower margin assumptions, partially offset by higher sales. We lower our 22E EPS from $4.35 to $4.05 on lower margin (-20bps vs. +10bps prior) and slower top-line growth assumptions (trimming 1pp from North America sales growth). We lower our target from $67 to $66 as we roll forward to our 23E EPS base of $4.25 (15.5x multiple remains unchanged)."

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