The iconic maker of Cheerios had "underperformed the market ... but demonstrated stronger execution than many of its peers in recent months," wrote Citi analysts Wendy Nicholson and Abigail Lake in a note published Friday.
Citi added that General Mills delivered much better-than-expected fiscal-first-quarter results, and the market barely noticed.
"We think that this is a good story in a tough sector that deserves a second look," they said.
Last week, the Minneapolis company reported adjusted earnings of 99 cents a share on revenue of $4.54 billion for the quarter ended Aug. 29.
Analysts surveyed by FactSet were expecting earnings of 89 cents a share on revenue of $4.3 billion.
Shares of the packaged-foods giant at last check rose 0.6% to $60.20.
The investment firm also raised its price target on the stock to $70 a share from $63.
"We expect that [General Mills] should continue to improve upon its market-share gains while raising prices to offset inflation," Nicholson and Lake said.
The analysts also noted that supply-chain issues could be a potential wild card here, but added that General Mills seems to be managing relatively well.
The analysts suggested that the stock is relatively cheap.
General Mills "is today trading at a 20% discount to the market on its year-forward [price to earnings multiple], which is far short of its historical average 9% premium to the market over the last 10 years," the note said.
"[This] discount valuation for General Mills today might be a function merely of investor preference for stocks that are perceived to be more clear Covid-recovery names in the near term," they said.
But "we believe that it does not give enough credit to GIS’s solid underlying business performance either of late or as we look ahead over the next several quarters."