Mondelez stock target cut, maintains rating amid headwinds

EditorNatashya Angelica
Published 2025-01-16, 10:54 a/m
MDLZ
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On Thursday, Piper Sandler adjusted its stock price target for Mondelez (NASDAQ:MDLZ) International (NASDAQ:MDLZ) shares, citing currency headwinds and rising cocoa costs. The new price target is set at $70.00, down from the previous $84.00, while the Overweight rating remains unchanged. Currently trading at $56.53, near its 52-week low of $55.97, InvestingPro analysis suggests the stock is undervalued, with a "GOOD" overall financial health score.

The firm's analysts have updated their financial model for Mondelez to account for the increased costs and limited visibility into future cocoa prices. The recent spikes in cocoa futures have led to a revision of the company's earnings estimates for the coming years.

Specifically, the estimated earnings per share (EPS) for 2025 have been reduced from $3.45 to $3.33, and the 2026 EPS forecast has been lowered from $4.00 to $3.79. The company maintains strong fundamentals with a healthy gross profit margin of 38.77% and steady revenue growth of 2.13% over the last twelve months.

Despite the challenges posed by the rising cost of cocoa, Mondelez is expected to have its cocoa needs covered for the entirety of 2025. The company is also beginning to secure futures for 2026, demonstrating proactive measures to manage its supply chain.

Piper Sandler's decision to lower the multiple to approximately 18.5 times, from the prior 21.0 times, reflects the uncertainty and potential impact of further incremental cocoa cost pressures. This new multiple is roughly one turn below Mondelez's five-year historical average.

The firm's price target adjustment from $84 to $70 comes as Mondelez navigates a complex global commodities market, with the company's forward-looking strategies being closely monitored by investors and analysts alike. With a current market capitalization of $75.52B and an attractive dividend yield of 3.32%, investors seeking deeper insights can access comprehensive analysis and additional ProTips through InvestingPro's detailed research reports, which include expert analysis on this and 1,400+ other US stocks.

In other recent news, Mondelez International has experienced a range of financial developments. Citi revised the company's stock price target to $71, citing the impact of rising cocoa prices. Despite this, the firm maintained a Buy rating. In contrast, Deutsche Bank (ETR:DBKGn) downgraded Mondelez's stock from Buy to Hold, adjusting the price target to $67 due to potential acquisitions and cocoa price concerns.

Mondelez has also announced a strategic partnership with Amazon (NASDAQ:AMZN) Web Services to drive digital innovation. This move is expected to enhance the company's security, agility, and reliability in its operations.

The company has also announced a $9 billion share buyback plan, replacing an existing plan with $2.8 billion remaining. This move has been affirmed by Citi with a reiteration of its Buy rating and a stock price target of $78.00. However, TD (TSX:TD) Cowen and BofA Securities have adjusted their price targets for Mondelez, citing concerns about rising cocoa prices and foreign exchange headwinds, but maintained their Buy ratings.

On the operational front, Mondelez appointed Volker Kuhn as Executive Vice President and President of its European operations, effective April 1, 2025. The company also reported robust growth in the third quarter of 2024, with a 5.4% increase in organic net revenue and a significant 28.6% rise in adjusted earnings per share.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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