Mondelez: Buy Rating Reaffirmed as Transitory Cocoa-Driven Headwinds Mask Strengthening Medium-Term Earnings Power

Analyst Megan Alexander of Morgan Stanley maintained a Buy rating on Mondelez International, boosting the price target to $66.00.

Megan Alexander has given his Buy rating due to a combination of factors that, in her view, support stronger earnings power beyond the near term despite a noisy outlook for FY26. She notes that the latest quarter exceeded expectations, including better-than-anticipated organic sales growth, even though guidance for 2026 earnings per share came in below market forecasts. The shortfall is largely linked to the sharp drop in cocoa prices, which has created temporary complications in Europe through potential retailer pushback, heightened competitive pricing behavior, and an accounting-related inventory revaluation that compresses near-term profits but should normalize over time.
Megan Alexander emphasizes that the subdued 2026 organic growth outlook appears deliberately conservative, particularly in Europe, where management is navigating atypical pricing dynamics and increased competition. She does not see the 2026 guidance as an accurate reflection of Mondelez’s longer-term profitability, highlighting that the inventory revaluation impact is mostly a timing issue rather than a structural deterioration. Her forecasts point to healthier gross margins in the second half of 2026, which she views as a more realistic baseline for 2027, when the company should more fully benefit from cocoa cost deflation and the anniversary of the inventory adjustment. Taken together, she believes that the market is overly focused on transitory headwinds, while the underlying fundamentals and medium-term earnings trajectory justify maintaining an Overweight/Buy stance on the stock.

In another report released today, TD Cowen also maintained a Buy rating on the stock with a $65.00 price target.