RBC Capital Raises Price Target on Kellogg (K) on Productivity and Stabilizing Cereal Trends
RBC Capital reiterated a Sector Perform rating on Kellogg (NYSE: K), and raised the price target to $72.00 (from $66.00) as a result of productivity and stabilizing cereal trends. Analyst David Palmer said that while Kellogg's cereal business is still declining, it pointed out that the category has stabilized in YOY sales trends.
Palmer commented, "We are lowering 2015E EPS as a result of currency headwinds and challenged top-line trends. However, we are raising our price target as a result of productivity and stabilizing cereal trends, adding visibility to EPS. Kellogg shares are trading at a ~1x turn valuation discount to peers, reflecting less M&A upside, below peer revenue trends, but potential for accelerating EPS growth in 2016."
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Shares of Kellogg closed at $67.50 yesterday.