Mondelez International: Navigating Cocoa Challenges with Strategic Growth Initiatives

DBS analyst Zheng Feng Chee maintained a Hold rating on Mondelez International (MDLZ – Research Report) today and set a price target of $64.00.

Zheng Feng Chee’s rating is based on a combination of factors that reflect both the opportunities and challenges facing Mondelez International. The company has reaffirmed its guidance for a 5% revenue growth and a 10% earnings decline for FY25, primarily due to high cocoa prices. Despite these challenges, Mondelez has implemented strategies to navigate the high cocoa costs, such as hedging cocoa prices and planning multiple price adjustments to pass on costs to consumers gradually.
Additionally, Mondelez’s focus on innovation, digitalization, and strategic acquisitions, such as its majority stake in Evirth, positions it for long-term growth. The company’s efforts to expand its e-commerce business and brand collaborations, like the Oreo Space Dunk campaign, have shown positive results. However, the potential impact of US import tariffs on Mexico and Canada adds uncertainty to the outlook. Consequently, while the company demonstrates strong execution and operational resilience, much of the potential upside from cocoa price moderation is already reflected in the current stock valuation, justifying the Hold rating.

Feng Chee covers the Consumer Defensive sector, focusing on stocks such as PepsiCo, Coca-Cola, and Mondelez International. According to TipRanks, Feng Chee has an average return of -7.3% and a 49.30% success rate on recommended stocks.

In another report released yesterday, D.A. Davidson also maintained a Hold rating on the stock with a $68.00 price target.