On Thursday, Citi adjusted its outlook on Mondelez (NASDAQ:MDLZ) International shares, reducing the price target to $84 from the previous $87 while sustaining a Buy rating on the stock. The adjustment comes as the company prepares to release its earnings report.
The change reflects a cautious stance due to recent challenges faced by the company, including increased cocoa prices and slower sales trends in the United States. Despite these headwinds, Citi's analysis suggests that even a modest outperformance in sales and earnings per share could be more positively received by the market this quarter compared to previous ones.
Mondelez International has experienced a pattern of surpassing earnings expectations, yet its stock price has not seen significant gains following these announcements. Over the past 16 quarters, there have been only two instances of 3-4% increases in the company's share price post-earnings release.
Investor sentiment towards Mondelez has turned more bearish, largely due to the dual pressures of rising cocoa costs and diminishing growth in U.S. market sales. These factors have contributed to the tempered expectations for the company's short-term performance.
Despite these concerns, Citi predicts that Mondelez could still deliver a slight increase in sales and earnings per share. However, the firm also notes that it does not anticipate a single quarter's results to fully alleviate the market's worries regarding potential inflationary pressures and softer demand in developed markets in the coming year.
InvestingPro Insights
As Mondelez International gears up for its earnings report, a glimpse into the company's financial health via InvestingPro suggests a robust fundamental picture. The market capitalization stands at a substantial $89.69 billion, reflecting Mondelez's significant presence in the industry. The company's P/E ratio, at 18.35, aligns with industry standards, and the adjusted P/E ratio for the last twelve months as of Q4 2023 is slightly higher at 20.32, indicating the market's expectations for future growth.
InvestingPro Data reveals a noteworthy revenue growth of 14.35% in the last twelve months as of Q4 2023, underscoring Mondelez's ability to expand its top-line amidst challenging market conditions. This is complemented by a solid gross profit margin of 38.22%, which demonstrates the company's efficiency in managing its cost of goods sold relative to sales.
With a dividend yield of 2.51% as of early 2024, Mondelez appears to maintain a commitment to returning value to shareholders. The InvestingPro Tips highlight the potential for Mondelez's earnings report to serve as a catalyst for the stock, especially if the results exceed the market's tempered expectations. Additionally, with a fair value estimation by InvestingPro at $77.73, investors may find the current price levels to be an attractive entry point.
To gain further insights and access to more InvestingPro Tips, which could help navigate the intricacies of Mondelez's financials and potential investment opportunities, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 15 additional tips available on InvestingPro that could further inform your investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.