Morgan Stanley Comments On General Mills Following Recent Earnings Release

Morgan Stanley is maintaining its Overweight rating on General Mills GIS, F2011 $2.47 EPS estimate, and $2.65 F2012 estimate, which represents 7% EPS growth, the low end of the company's long-term growth algorithm. While formal F12 guidance was not provided, management indicated that initial F12 guidance should be in line with its +HSD long-term growth algorithm. Morgan Stanley reiterates its view that high quality, high single digit EPS growth will likely be difficult to achieve in C/F 2012 given a resurgence of inflation. While healthy balance sheets could limit absolute EPS risk, Morgan Stanley does not believe the group will enjoy multiple expansion and expect consensus price targets and estimates to move lower from here. Morgan Stanley has an Overweight rating and $38.50 PT on GIS GIS closed Wednesday at $36.91