Nestlé SA, the Consumer Defensive sector company, was revisited by a Wall Street analyst today. Analyst David Hayes from Jefferies maintained a Sell rating on the stock and has a CHF77.00 price target.
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David Hayes has given his Sell rating due to a combination of factors impacting Nestlé SA’s financial performance. The company’s recent results showed a decline in Real Internal Growth (RIG) for the second quarter, which fell by 0.4% year-over-year, missing market expectations. This contraction is attributed to weaknesses in key markets such as China and Latin America, as well as challenges in the confectionery sector.
Additionally, Nestlé’s commitment to maintaining its operating margin in the second half of the year appears fragile. The company has flagged that its operating margin is expected to be significantly lower than the 16.5% achieved in the first half, due to pressures from tariffs, input costs, and foreign exchange rates. Although the company has reiterated its full-year outlook, the guidance for advertising and promotion spending remains at 8.6%, which is below the 9% or more needed to stay competitive. These factors contribute to the cautious outlook and the Sell rating.