General Mills' (GIS) fiscal Q2 growth is "likely to remain challenged" with a 3% decline expected in North American retail, UBS Securities said Wednesday in a report.

International growth may also decline after a temporary benefit in fiscal Q1, and the pet segment is expected to little changed amid "flattish consumption trends," UBS said.

The company needs H2 growth of more than 2% to achieve the midpoint of its full-year outlook, the report said.

"We think the risk/reward continues to skew to the downside," the report said.

UBS cut its price target on General Mills stock to $47 from $49 and maintained its sell rating.

Price: 49.78, Change: +0.59, Percent Change: +1.21