K - Kellogg Company is cut at UBS on concerns inflation costs can't be passed on

UBS turned cautious on Kellogg Company ( NYSE: K ) with a downgrade to a Hold rating from Buy.

Inflation and pricing concerns drove the ratings drop with the firm's trade down analysis suggesting cracks are beginning to form with consumer spending.

"We are concerned that the company is going to experience a significant amount of inflation over the NTM and will likely have difficulty passing through as much price going forward in light of WMT’s/TGT’s/KR's recent commentary to keep costs down in food and beverage categories," warned analyst Cody Ross.

Ross and team believe Street estimates are too high on Kellogg ( K ) and think the lack of details on the spinoff of the North America cereal and plant-based meat businesses will hurt sentiment.

The firm assigned a new price target of $74 to reflect the upcoming spinoff.

Shares of Kellogg Company ( K ) fell 1.54% premarket to $71.63.

The Seeking Alpha Quant Rating on Kellogg has been at Hold for all of 2022.

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