On Friday, Jefferies adjusted its outlook on Mondelez (NASDAQ:MDLZ) International (NASDAQ:MDLZ), reducing the price target to $78 from the previous $83, while still recommending the stock as a Buy. The firm's assessment suggests that Mondelez is positioned to recapture margins through various strategic improvements.
The analysis highlighted the stability of key brands within Mondelez's portfolio, noting the importance of inventory management which has been effectively right-sized as of the fourth quarter of 2022. Additionally, the firm anticipates a significant opportunity in the second half of 2024 with Athleta, as the brand refocuses on performance products under new leadership from Alo.
Jefferies predicts over 200 basis points of margin improvement for Mondelez, attributing this potential to a combination of factors. These include the recapture of product costs, which could contribute approximately 200 basis points, identified cost savings of $150 million, and a leaner return-on-operations (ROD) structure, which is expected to offer a 200 basis point benefit compared to 2019.
The report emphasizes the importance of structural self-help measures that Mondelez is expected to implement. These measures are seen as a driving force behind the forecasted margin recovery and are supported by the company's strategic initiatives.
Mondelez International, known for its global snack food and beverage portfolio, is being watched closely by investors as these developments unfold. The revised price target reflects a cautious yet optimistic view of the company's financial prospects in the near term.
InvestingPro Insights
In light of Jefferies' updated outlook on Mondelez International, current data from InvestingPro provides additional context to the company's financial health. As of the last twelve months leading up to Q1 2024, Mondelez boasts a solid market capitalization of $91.06 billion. The company's P/E ratio stands at a reasonable 17.13, reflecting an adjustment for the period, which may appeal to value-oriented investors. Moreover, the revenue growth of 9.85% during this time illustrates a robust expansion, underpinning Jefferies' positive stance on the company's strategic initiatives.
For those seeking investment insights, the InvestingPro platform offers further analysis with an additional 25 InvestingPro Tips. Among these, two tips are particularly pertinent: Mondelez's dividend yield has grown to 2.5%, showcasing its commitment to returning value to shareholders, and the firm's revenue growth aligns with Jefferies' expectations for margin improvements. Additionally, Mondelez's stock is currently trading at 87.94% of its 52-week high, which may indicate a potential upside for investors considering the company's strategic improvements and stable brand portfolio.
For a deeper dive into Mondelez International's financials and strategic outlook, consider subscribing to InvestingPro. Utilize the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, granting access to comprehensive analysis and investment tools.
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