Mondelez Has 'Vicious Cycle Risk,' Nomura Says

In a report published Wednesday, Nomura analyst David Hayes commented that

showed a drop in volume of 3.1 percent year over year in the fourth quarter, despite easier comps. Hayes noted that the company has already acknowledged it will lose market share for the sake of margin delivery. The company expects 1 percent of sales contraction in fiscal 2015, leading the analyst to state that this creates a "vicious cycle," with diminishing contribution to ta streamlining cost base. "We feel these risks are not sufficiently discounted at 22x P/E," Hayes wrote. Hayes raised his fiscal 2015 earnings per share estimate by four percent to $1.68 but noted this was a function of adjusting his interest cost line. Looking forward, the margin story continues to be imperative to the company's investment case as the analyst expressed concern that the company's margin targets are "overly ambitious." Shares remain Reduce rated with a price target lowered to $29 from a previous $30.