Deutsche Bank Previews F3Q11 Earnings For General Mills

In a report published by Deutsche Bank, it previews F3Q11 earnings for General Mills GIS. Deutsche Bank said that, although questions around the Yoplait acquisition may raise near term concerns, its BUY opinion is based on leading share in many U.S. categories (cereal, refgd. dough, yogurt, cake mix), strong new products, LT productivity efforts, solid balance sheet, good cash flow and still reasonable valuation. “Our $41 target is based on 3-equal weighted valuation tools (see below) incl. a DCF model (using 4% sales, 5% EBIT, 8% EPS growth using a 9% WACC (via CAPM: 0.8 beta, 4.5% risk free rate, 10% req. return). Risks incl competition (branded, pvt label), input costs (energy, sugar, flour), FX (mixed).” General Mills closed yesterday at $36.13.