Mondelez Price Target Lowered to $70 from $82 at Stifel

Mondelez International, Inc. (MDLZ) has seen a significant revision in its price target by Stifel analyst Matthew Smith, who downgraded the target from $82 to $70. This change reflects a more cautious outlook on the company's growth prospects, driven by several key factors. The analyst cited slowing growth in emerging markets, increased competition in the U.S., higher input costs, and currency headwinds as primary reasons for the price target reduction.

Slowing growth in emerging markets, which have been a significant driver of Mondelez's growth, is now facing headwinds. Stifel noted that emerging markets revenue growth slowed to 4.9% in the third quarter of 2024, down from 6.0% in the second quarter. This slowdown is concerning, as emerging markets have historically contributed significantly to the company's overall growth.

Increased competition in the U.S. market is another factor impacting Mondelez's growth prospects. The company faces strong rivals such as Hershey and Mars, and the intense competition in the U.S. market has led to slower revenue growth. Stifel highlighted that U.S. revenue growth slowed to 3.7% in the third quarter, down from 4.4% in the second quarter.

Higher input costs, particularly for cocoa and other raw materials, have also posed challenges for Mondelez. The company's gross margin decreased by 610 basis points in the third quarter of 2024, primarily due to unfavorable year-over-year change in mark-to-market impacts from derivatives and the impact of the 2023 divestiture of the developed market gum business. This decrease in gross margin highlights the pressure on the company's profitability from higher input costs.

Currency headwinds have also contributed to the lower price target. Stifel mentioned that unfavorable currency-related items partially offset Mondelez's organic net revenue growth in the third quarter. This underscores the importance of currency fluctuations in the company's overall financial performance.

Despite these challenges, the average analyst rating for MDLZ remains "Buy," suggesting that analysts still have a positive outlook on the company's long-term prospects. However, the price target revision may impact the overall investment thesis for Mondelez International, Inc. by potentially lowering expected returns, increasing risk, and affecting the stock's valuation.

Investors should consider these factors when evaluating the stock and make decisions based on their individual investment goals and risk tolerance. The change in price target could have various implications for investors, depending on their investment goals, risk tolerance, and time horizon. It is essential for investors to consider these factors and make informed decisions based on their individual circumstances.