On Tuesday, Redburn-Atlantic initiated coverage on Mondelez (NASDAQ:MDLZ) International (NASDAQ: MDLZ) stock, issuing a Buy rating and setting a price target of $82.00.
The firm's analysis suggests that Mondelez stands out among confectionery companies with an expected long-term organic sales growth rate of 4.7% per annum. This figure is notably above the consensus and aligns with the upper end of the company's own long-term growth guidance, which ranges from 3% to 5%.
The positive outlook is based on a detailed category- and country-level analysis. The firm highlighted Mondelez's strategic moves in Europe and North America, where it has not only strengthened its core chocolate and biscuits business but also diversified its portfolio into adjacent snack categories that are growing more rapidly.
This strategy is seen as a counterbalance to the risks associated with the slowing chocolate consumption in Europe and the declining biscuits consumption in the United States.
Internationally, Mondelez has been recognized for establishing a leading chocolate and biscuits distribution network. Redburn-Atlantic sees significant potential for Mondelez's organic sales growth and operating margin expansion in key markets such as India, China, Mexico, and Brazil.
The company's efforts to increase brand penetration, add new distribution points, and broaden its product portfolio across more categories are expected to drive this growth.
The analyst's commentary underscores Mondelez's position as their top pick within the confectionery sector. The firm's assessment points to Mondelez's proactive portfolio management and expansion strategies as key factors in mitigating market risks and capitalizing on growth opportunities in both established and emerging markets.
In other recent news, Mondelez International has been the center of several noteworthy developments. The global snack food conglomerate is set to unveil its third-quarter earnings for 2024, with Citi projecting these to surpass consensus estimates.
However, Citi also cautions that significant cocoa inflation expected to kick in during the fourth quarter may impact upcoming earnings. Regardless, the firm maintains a long-term positive outlook for Mondelez, raising its stock price target to $80.
Mondelez has also been making strategic moves to expand its business. It has agreed to acquire a majority stake in Evirth, a leading Chinese manufacturer of frozen-to-chilled cakes and pastries, pending regulatory approval. Additionally, the company has issued $500 million in senior notes due 2034, as part of a broader Registration Statement on Form S-3.
Analysts have also weighed in on the company's prospects. Goldman Sachs (NYSE:GS) initiated coverage on Mondelez with a Buy rating, while Piper Sandler adjusted its price target to $78.00, maintaining an Overweight rating. DA Davidson revised its target to $75 from $80, also maintaining a Buy rating. These are all recent developments in the company's ongoing operations.
InvestingPro Insights
Mondelez International's financial metrics and market performance align well with Redburn-Atlantic's positive outlook. According to InvestingPro data, Mondelez boasts a robust market capitalization of $94.08 billion, reflecting its strong position in the confectionery market. The company's revenue for the last twelve months as of Q2 2024 stood at $35.98 billion, with a healthy revenue growth of 5.41% over the same period, supporting the analyst's projection of sustained long-term organic sales growth.
Mondelez's strategic moves in portfolio diversification and international expansion are reflected in its financial performance. The company's gross profit margin of 40.34% and operating income margin of 18.42% for the last twelve months ending Q2 2024 indicate efficient operations and potential for margin expansion, as highlighted in the Redburn-Atlantic analysis.
InvestingPro Tips further reinforce the positive outlook:
1. Mondelez has raised its dividend for 10 consecutive years, demonstrating a commitment to shareholder returns that aligns with its strong market position.
2. The company has maintained high profitability over the past decade, which supports the analyst's view on Mondelez's ability to capitalize on growth opportunities.
These insights are just a sample of the valuable information available on InvestingPro. Subscribers can access 14 additional tips for Mondelez International, providing a more comprehensive analysis to inform investment decisions.
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