NEW YORK — Credit Suisse in a Nov. 23 research note downgraded Battle Creek, Mich.-based Kellogg Co. to “neutral” from “outperform,” while also lowering the company’s 2021 earnings-per-share estimate to $3.95 from $4.10.

In issuing its revised outlook, Credit Suisse research analyst Robert Moskow said the credit agency now expects management to guide a year of elevated investment in 2021 without promising elevated sales growth.

“This makes it difficult to view Kellogg as a net beneficiary of the market changes caused by the COVID-19 pandemic longer term or assume a favorable ROI (return on investment) on its higher spending,” Mr. Moskow noted in the report.

Elaborating on Credit Suisse’s reasoning for expecting disappointing guidance for 2021 Mr. Moskow said, “To emphasize its commitment to retaining consumers who rediscovered Kellogg brands during the pandemic, management said four times during its 3Q earnings call that ‘now is the time’ for increased investment. We tend to favor the companies that are making these investments, but only if we feel confident that it leads to above-algorithm sales growth longer term. Instead, management has consistently guided to sharp decelerations in its sales trends during the course of 2020 and has indicated that investments ‘increase its confidence’ in its current trajectory rather than signaling a longer-term step-up. We therefore believe management will guide for further deceleration in 2021 (perhaps to -2%) because it is not comfortable promising anything higher than its long-term algorithm for LSD growth on a two-year CAGR basis.”

In late October, Kellogg issued third-quarter financial results that showed the company gained share in most of its primary US categories.

Kellogg net income in the quarter ended Sept. 26 was $348 million, equal to $1.02 per share on the common stock, up 41% from $247 million, or 73¢ per share, in the third quarter last year. Net sales were $3.43 billion, up 1.8% from $3.37 billion in July-September 2019.

At that time, Kellogg forecast net sales growth of 6% in 2020, up from a 5% projection after the second quarter and 1% to 2% after the first quarter. Operating profits for the year are expected to rise 2%, versus guidance of a decline of 1% a quarter ago and a 4% decline after the first quarter.

But Mr. Moskow noted in the Credit Suisse report that Kellogg could be headed toward tough comparisons in North America and Mexico during 2021.

“In US cereal (20% of total Kellogg), Kellogg regained market share as we expected through most of 2020, but the share gains reversed over the past 12 weeks owing to weaker Frosted Flakes sales,” he said. “In Latin America (7% of total), we expect sales to decline in 2021 because of difficult comparisons to the lockdowns in the first half of the year that spurred unusually high breakfast cereal category growth. We also expect a tough comparison in North American Frozen (about 12% of total) in 2021 to this year’s launch of the new plant-based Incogmeato brand. We believe Incogmeato will have trouble competing against the better-known, more highly-differentiated Beyond and Impossible brands.”