In a research note published on September 20, the analyst mentions that BUY rating has been reiterated for General Mills and its target price has been raised from $44 to $46. Furthermore, for packaged food companies of the US, considerable challenges can be produced by passage of CA Prop 37 on November 6, 2012, even though receiving nominal attention.
Forcing companies to select among labeling challenges, product reformulation and scale economies, Prop 37 might create exact requirements for GMO in opposition to non-GMO labeling. Furthermore, heavy litigation is expected with potential US government or FDA intervention, even if Prop 37 passes.
In addition to this, inclusive of consumer backlash over GMO awareness, distribution or manufacturing inefficiencies, availability of non-GMO ingredient and risk of product reformulation, this will create expensive challenges. Also it is apparent that companies, which are US centric, are most exposed, despite the fact that fruit and milk are excluded from requirements of Prop 37.
Moreover, it has been noticed that in order to deal with the new regulatory landscape and its sales or cost implications, Campbell Soup Company (NYSE: CPB), ConAgra Foods (NYSE: CAG), General Mills (NYSE: GIS), The Hershey Company (NYSE: HSY), Smucker (NYSE: SJM), KRFT and Snyder’s- Lance (NASDAQ: LNCE) can be forced, although it is very complicated to determine the fundamental impact.
As a group, a neutral outlook is maintained on packaged food. Although being costly against the S&P 500, valuation is seen as logical in absolute terms i.e., 16x C2013E P/E and 10x EV/EBITDA, the analyst adds further.
New York, May 24 (FinanceEnquiry.com) – The economic statistics unleashed on May 23 signified solid vocation expansion and gave more indications that housing is getting better. Being a level constant with steady...Spice M-5566 Flo Entertainer: Sail Smoothly with New Technology - May 23, 2013
New York, May 21 (FinanceEnquiry.com) – Corn slipped for another day as soon as US planters stepped up planting on warmer climate, improving cheerfulness that output in the largest producer will arrive at a...Crude Oil Futures Fall in Asia; Market Looks Forward to Bernanke’s Evidence - May 20, 2013
New York, May 20 (FinanceEnquiry.com) – Since investors remained on the sidelines prior to the viewpoint of US Federal Reserve chairman on the economy afterward in the week, due to this, crude oil futures...Wall Street Futures on Upturn - May 17, 2013
Detailing it, by 0.21 percent, the Dow Jones industrial...Confidence amid House Builders Improves in May - May 16, 2013
New York, May 15 (FinanceEnquiry.com) – On apprehensions on the subject of increasing supplies from the United States and an austere stance for worldwide demand expansion, Brent futures fell towards $102 per barrel...European Stocks Likely to Start Higher; the Dollar Becomes Feeble - May 14, 2013
New York, May 14 (FinanceEnquiry.com) – On May 14, European stocks are probable to start higher, at the side of feebler government bonds, as soon as US retail sales statistics came above anticipations...Gold and Oil Costs Slip since Dollar Fortifies; Japanese Equities Surpass - May 13, 2013
New York, May 13 (FinanceEnquiry.com) – Pulling Asian shares lower, oil and gold costs slipped on the very first day of this week seeing that the dollar fortified, even though on the back of the yen's fall to...