On Wednesday, Citi reaffirmed its Buy rating and $78.00 stock price target for Mondelez (NASDAQ:MDLZ) International (NASDAQ:MDLZ), following the company's announcement of a new $9 billion share repurchase program. With a current market capitalization of $85.1 billion and trading at $63.59, InvestingPro analysis suggests the stock is currently undervalued relative to its Fair Value, presenting a potential opportunity for investors.
The new buyback plan is set to replace the existing authorization, which had $2.8 billion remaining. Mondelez also emphasized their continued strategy of acquiring bolt-on assets, which has been demonstrated through recent purchases such as Chipita, Clif, and Ricolino.
The company's commitment to this acquisition strategy was underscored by its press release, which highlighted its focus on smaller, complementary purchases similar to its past acquisitions. These previous deals ranged in value from $1.3 billion to $2.9 billion, significantly less than the speculated acquisition of Hershey, which has an enterprise value of over $40 billion.
With last twelve months revenue of $36.15 billion and a solid Financial Health Score of "FAIR" according to InvestingPro, Mondelez has demonstrated its ability to execute strategic acquisitions while maintaining financial stability.
Earlier in the week, speculations arose about Mondelez's potential interest in acquiring Hershey. However, the size of Hershey would represent a departure from Mondelez's typical bolt-on acquisition approach. This is particularly notable given the smaller scale of Mondelez's recent acquisitions, with Chipita valued at $2.0 billion, Clif at $2.9 billion, and Ricolino at $1.3 billion.
Moreover, Mondelez's active share repurchase activity, which saw $0.4 billion in buybacks to date in the fourth quarter, suggests that the company did not scale back on repurchasing shares earlier in the quarter. This financial maneuver indicates Mondelez's ability to return value to shareholders while pursuing its strategic growth initiatives.
The prospect of Mondelez acquiring Hershey had been discussed earlier on Monday, questioning the feasibility and potential challenges of such a merger. The analyst's commentary reflected on the possibility of a significant consolidation within the chocolate industry, but Mondelez's recent announcement seems to reaffirm its current acquisition strategy, focusing on smaller, strategic targets.
Analyst consensus remains strongly bullish, with targets ranging from $74 to $92 per share. For deeper insights into Mondelez's financial health and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company's acquisition strategy and market position.
In other recent news, Mondelēz International has announced a $9 billion share buyback plan, superseding the existing $6 billion program. This move is part of the company's broader capital allocation strategy, which includes brand reinvestment, dividends, share repurchases, and mergers and acquisitions.
TD Cowen and BofA Securities have both adjusted their price targets for Mondelēz, citing concerns about rising cocoa prices and foreign exchange headwinds, but maintained their Buy ratings.
Mondelēz has also appointed Volker Kuhn as Executive Vice President and President of its European operations, effective April 1, 2025. This leadership transition is part of Mondelēz's strategic planning.
Moreover, the company reported robust growth in the third quarter of 2024, with a 5.4% increase in organic net revenue and a significant 28.6% rise in adjusted earnings per share. These are recent developments in the company's business strategy and financial performance.
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