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New CEO Sweetens Mondelez Outlook, Societe Generale Upgrades To Buy

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New CEO Sweetens Mondelez Outlook, Societe Generale Upgrades To Buy
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Mondelez International Inc (NASDAQ: MDLZ) reported in-line earnings this week with 2.4-percent organic sales growth and 21-percent earnings per share growth.

The resulting 4.8-percent value boost remains largely intact — and there's room for more upside, according to a Societe Generale analyst.

The Rating

Societe Generale analyst Warren Ackerman upgraded Mondelez from Hold to Buy and increased the price target from $45 to $55.

The Thesis

The upgrade was partly inspired by new CEO Dirk Van de Put’s strategic review, Ackerman said. (See the analyst's track record here.) 

Societe Generale anticipates four possible outcomes from the review:

  • An exit from direct store distribution.
  • A 20-percent margin target.
  • A sale of the cheese business.
  • An increase in advertising and commercial investments.

Since Mondelez will be under relatively new leadership at the time of the review presentation, Ackerman said he expects pursuit of the least difficult option — heightened ad support — with flexibility to pursue more aggressive strategies in the mid-term.

Mondelez' changing story in emerging markets — where the snack company saw 6.3-percent increases last quarter across Brazil, Russia, India and China — is encouraging, Ackerman said. 

“North America issues in biscuits continue but categories and execution are improving, and innovation for FY18 is in place,” he said, noting that the worst of the region’s issues appear to be over.

Societe Generale values Mondelez at a 10-percent premium to global staples.

Price Action

At the time of publication, shares were trading up 0.46 percent at $46.08. 

Related Links:

Mondelez Proves It’s Still A Worthy Investment

Mondelez Has A Buying Opportunity Around $40, Recent Weakness An Overreaction

Latest Ratings for MDLZ

DateFirmActionFromTo
Jan 2019BerenbergDowngradesBuyHold
Jan 2019GuggenheimInitiates Coverage OnBuy
Sep 2018Morgan StanleyAssumesEqual-Weight

View More Analyst Ratings for MDLZ
View the Latest Analyst Ratings

Posted-In: Dirk Van de Put Societe Generale Warren AckermanAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

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