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Mondelez's 'Best Is Still To Come,' Credit Suisse Says

Mondelez Has A Buying Opportunity Around $40, Recent Weakness An Overreaction
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In a report published Monday, Credit Suisse analyst Robert Moskow maintained an Outperform rating on Mondelez International Inc (NASDAQ: MDLZ), while raising the price target from $42 to $48.

Mondelez is poised to record significant operating margin expansion and surpass the 15-16 percent goal established for 2016. "The company is now almost half-way to its goal before it even begins to implement its restructuring programs," analyst Robert Moskow mentioned.

The company is taking steps to reduce costs and improve its performance. The full results of the company's supply chain restructuring are yet to come. "The company's gross margin expanded 110 bps in 1Q before it even began to switch its manufacturing capacity to the new, state-of-the-art production lines now starting up around the world," Moskow added.

In the report Credit Suisse noted, "Mondelez' recent announcement that it will close half of the production at its South Chicago biscuit facility and transfer it to Salinas Mexico marks the first step in this multi-year initiative."

The transition to faster production lines is expected to boost Mondelez's gross margins by about 500 to 1000bps, depending on the location of the line.

The EPS estimates for 2016 and 2017 have been raised from $2.00 to $2.03 and from $2.15 to $2.25, respectively.

Latest Ratings for MDLZ

Jul 2017PiperJaffrayUpgradesNeutralOverweight
May 2017PiperJaffrayInitiates Coverage OnNeutral
May 2017Deutsche BankUpgradesHoldBuy

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Posted-In: Credit Suisse VetrAnalyst Color Price Target Reiteration Analyst Ratings


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