How Will Kellogg (K) Stock Be Affected Today by This Analyst Action?

NEW YORK (TheStreet) -- Shares of Kellogg Co. (K) are up 0.10% to $61.81 in pre-market trading after the company's rating was cut from to "underweight" from "equal-weight" by Morgan Stanley.

Morgan Stanley said it lowered the multinational food manufacturing company's rating because the prospects of a recovery are fading.

A $58 price target is set for Kellogg.

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Watch the video below for more analysts' actions Tuesday:

Separately, TheStreet Ratings team rates KELLOGG CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate KELLOGG CO (K) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Food Products industry and the overall market, KELLOGG CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $386.00 million or 5.17% when compared to the same quarter last year. In addition, KELLOGG CO has also modestly surpassed the industry average cash flow growth rate of 2.87%.
  • 42.52% is the gross profit margin for KELLOGG CO which we consider to be strong. Regardless of K's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, K's net profit margin of 8.00% compares favorably to the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 1.4%. Since the same quarter one year prior, revenues slightly dropped by 0.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, K has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • You can view the full analysis from the report here: K Ratings Report
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