Kellogg Is A Growth Stock On Sale, Goldman Sachs Says In Bullish Turn

Shares of Kellogg Company (NYSE: K) continued to rise on Tuesday, after receiving an upgrade from Bernstein analyst Alexia Howard.

Even as other food companies may struggle to grow, Kellogg should be able to sustain growth "given its favorable end-market exposure and strong business momentum," according to Goldman Sachs.

The Kellogg Analyst: Jason English upgraded the rating for Kellogg to Buy, while raising the price target from $78 to $83.

The Kellogg Thesis: Concerns around stranded costs related to the planned spin-out of Kellogg’s North American cereal business has created a buying opportunity, “as it is overshadowing the underlying growth outlook for the business,” English said in the upgrade note.

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These stranded costs are likely being “overestimated by some given that the company has already begun to burden its P&L with stand-alone public company costs as it stands up a company-within-a-company,” the analyst added.

The stock is “mispriced for the growth potential it offers investors,” English wrote. There is an “opportunity to exploit the dislocation we believe this exacerbated concern has created and recommend investors buy this secularly advantaged growth stock on sale,” he added.

K Price Action: Shares of Kellogg were up 1.9% to $66.81 at the time of publishing Tuesday.

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