Analysts Slash Expectations on Kellogg Stock

K stock is down 6% year-to-date

Managing Editor
Nov 14, 2018 at 10:25 AM
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Cereal maker Kellogg Company (NYSE:K) is moving lower in early trading, as analysts react to the company's underwhelming plans for a turnaround, which were announced yesterday at its investor conference. Among the specifics, Kellogg is selling its Keebler bakery brands and cookie business, and said it'll continue to be active in M&A. In response, K is down 1.3% at $62.60 at last check, earlier touching its lowest point since June, and no fewer than six brokerage firms have slammed the equity with bear notes.

Most notably, J.P. Morgan Securities downgraded Kellogg stock to "neutral" from "overweight," and slashed its price target to $66 from $73, adding it's losing confidence that the company's turnaround will be swift. Analyst attention was already pessimistic coming into today, however, with seven of 12 following firms sporting "hold" or worse ratings.

In the options pits, traders have also been skeptical, with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing a 10-day put/call volume ratio of 3.69, ranking in the 74th annual percentile. This indicates that during the past two weeks of trading, puts have been purchased over calls at a faster-than-usual clip.

Wrapping up, Kellogg stock has struggled on the charts this year, recently gapping back below the support of its 120-day moving average, following a disappointing late-October third-quarter report. The shares touched a four-year low of $56.40 on May 2, and at last glance were down 6% year-to-date.

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