Market Commentary and Intraday News

Ahead of the Bell: Kellogg

224 days ago

(AP:NEW YORK) Kellogg's voluntary recall of certain packages of its Mini-Wheats Bite Size cereal may hurt its sales a bit, an analyst said Thursday.

On Wednesday, Kellogg Co. announced that it was making the recall because of the possible presence of a flexible metal mesh from a faulty manufacturing part.

The food maker said there have been no reports of injuries and that it was issuing the recall as a precaution. Kellogg said 282,000 cases of products in the U.S. were included in the recall. The Battle Creek, Mich., company said that retailers have likely removed most of the boxes from shelves by now.

Christopher Growe of Stifel Nicolaus said in a client note that because the recall may hurt sales, he now foresees third-quarter organic revenue rising 2.5 percent and volumes declining 1 percent.

The analyst reiterated a "Hold" rating.

Citi Investment Research's David Driscoll says that because Kellogg maintained its full-year earnings forecast in spite of the recall, he believes other parts of the company's portfolio are performing well.

Driscoll says since the recall is only for certain packages of Mini-Wheats Bite Size cereal, he doesn't expect the entire brand to be pulled from shelves.

While the recall is a bit disappointing, Driscoll says the scope seems to be minimal in comparison to 2010 when Kellogg had recalls that impacted four cereal brands and Eggo frozen waffles.

The analyst reaffirmed a "Buy" rating and $58 price target.

Kellogg shares finished at $51.43 on Wednesday. Its shares have risen 10 percent from a 52-week low of $46.33 in late July.

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