GIS - Food sector breakdown by Morgan Stanley includes ratings boost for Hostess Brands and cut for General Mills

Morgan Stanley resets ratings in the food sector to account for the softer post-COVID setup as the pantry-loading effect fades. "We prefer companies that are leveraged to a post-COVID topline recovery, benefit from secular growth tailwinds, and have stronger pricing power.," notes analyst Pamela Kaufman on the new outlook. Kaufman and team forecast volume pressure, limited benefit from more work from home and see risk to the industry's pricing power due to potential retailer pushback. The firm lowers its rating on General Mills (GIS -0.6%) to Underweight from Neutral and drops the price target to $51 from $57. Weaker end markets for GIS in comparison to peers are noted. Morgan Stanley likes the setup on Hostess Brands (TWNK +2.8%), upgrading the snacking powerhouse to Overweight from Equal-weight and assigning a price target of $20. TWNK is said to be well positioned to benefit from multiple tailwinds including shifting consumer preferences

For further details see:

Food sector breakdown by Morgan Stanley includes ratings boost for Hostess Brands and cut for General Mills