DA Davidson has revised its stance on Mondelez International (MDLZ, Financial), downgrading the stock from a Buy to a Neutral rating. Despite increasing the price target slightly to $68 from $66, the investment firm highlights potential challenges for the company in the near term.
The downgrade stems from concerns over weakened snacking demand within the United States and a less than optimistic outlook across various emerging markets. These factors, coupled with broader uncertainties like macroeconomic fluctuations and cocoa market volatility, have led DA Davidson to assess Mondelez's risk/reward scenario as balanced, especially following a significant rally of nearly 20% from its low point in early February.
Analysts also point to global economic slowdowns, escalating trade tensions, inflationary trends, and geopolitical risks as factors that may affect Mondelez's performance in emerging markets. This comprehensive array of challenges suggests a cautious approach to the company's future prospects.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 27 analysts, the average target price for Mondelez International Inc (MDLZ, Financial) is $69.97 with a high estimate of $81.00 and a low estimate of $52.00. The average target implies an upside of 3.84% from the current price of $67.38. More detailed estimate data can be found on the Mondelez International Inc (MDLZ) Forecast page.
Based on the consensus recommendation from 30 brokerage firms, Mondelez International Inc's (MDLZ, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Mondelez International Inc (MDLZ, Financial) in one year is $80.67, suggesting a upside of 19.72% from the current price of $67.38. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Mondelez International Inc (MDLZ) Summary page.
MDLZ Key Business Developments
Release Date: February 04, 2025
- Organic Net Revenue Growth: 4.3% for the year.
- Adjusted Gross Profit Dollar Growth: 5.1% for the year.
- Adjusted EPS Growth: 13% for the year.
- Free Cash Flow: $3.5 billion for the year.
- Capital Return to Shareholders: $4.7 billion through buybacks and dividends.
- Revenue Growth in Emerging Markets: 6.2% for the year.
- Revenue Growth in Developed Markets: 3.2% for the year.
- Chocolate Revenue Growth: 7.4% for the year.
- Biscuits Revenue Growth: 1.7% for the year.
- Gum and Candy Revenue Growth: More than 7% for the year.
- Market Share Gain: Gained share in 50% of the revenue base.
- New Share Repurchase Authorization: $9 billion from 2025 to 2027.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mondelez International Inc (MDLZ, Financial) delivered balanced top-line growth with a mid-single-digit increase across both developed and emerging markets.
- The company achieved gross profit dollar growth in the mid-single digits despite continuing input cost inflation, driven by cost discipline and sound pricing.
- Mondelez International Inc (MDLZ) generated strong free cash flow of $3.5 billion, including a settlement with the EU commission.
- The company returned $4.7 billion to shareholders through buybacks and dividends, demonstrating a strong commitment to capital return.
- Mondelez International Inc (MDLZ) made significant progress toward sustainability objectives, with 90% of cocoa volume sourced through its Cocoa Life program and a 38% reduction in carbon emissions since 2018.
Negative Points
- Mondelez International Inc (MDLZ) faces unprecedented cocoa cost inflation, impacting profitability and requiring strategic adjustments.
- The company expects an adjusted EPS decline of approximately 10% in 2025 due to high cocoa costs.
- North America's biscuit category is experiencing softness, with limited pricing possibilities and increased elasticities.
- The company anticipates potential headwinds from new executive orders imposing tariffs on US imports from Mexico and Canada.
- Mondelez International Inc (MDLZ) is planning for elevated cocoa prices to persist into 2025, which may necessitate further pricing actions.
