Mondelez Remains This Analyst's Top Pick For Global Staples Investors Despite FX Drag

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  • Mizuho analyst John Baumgartner reiterated a Buy rating on the shares of Mondelez International Inc (NASDAQ: MDLZ) and lowered the price target from $75 to $70.
  • The analyst said Mondelez exited Q2 with FY22 guidance, effectively embedding H2 uncertainties from potential disruptions tied to a second round of price increases in Europe and potentially larger elasticities from sustained consumer inflationary pressures.
  • Material dislocations in Europe appear unlikely, Mizuho Global Food Demand Index suggested demand across emerging markets remained strong, and in the U.S., category retail elasticities for cookies & crackers remain muted, added Baumgartner.
  • Mondelez appeared poised for share growth in FY23 from recovery across Local Jewels brands, accretive chocobakery portfolio, and distribution across emerging markets.
  • Baumgartner noted he was confident modeling 4%+ organic sales in FY23, but uncertainties pertain to EBIT growth considering inflation and reinvestments.
  • Headwinds related to third-party labor shortages, and a supply/demand imbalance for trucking capacity and containers, have pressured distribution of cookies and crackers in FY22.
  • The analyst mentions that Mondelez is expanding manufacturing and warehousing capacity and has guided for recovery in H2.
  • Baumgartner specified that BRIC countries comprise nearly 40% of global consumption for commodities, including sugar and vegetable oils, the key ingredients in the company’s portfolio.
  • Finally, the analyst reiterated the resilience of global snacking and said strong execution should limit downside risks to FX-neutral growth through FY23.
  • Mondelez will release its third quarter 2022 financial results on November 1, 2022.
  • Price Action: MDLZ shares are trading lower by 0.19% at $61.59 on the last check Monday.
  • Photo Via Company
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