Sell Rating for Nestlé SA Due to US SNAP Payment Reductions and Legislative Challenges

Nestlé SA (NSRGF – Research Report), 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 CHF75.00 price target.

David Hayes has given his Sell rating due to a combination of factors impacting Nestlé SA’s future prospects. A significant concern is the potential reduction in SNAP/food voucher payments in the United States, which poses a risk to Nestlé’s sales. The recent approval of the “Farm Bill” by the US House of Agriculture includes a proposed $300 billion cut to these vouchers over the next decade.
With SNAP vouchers accounting for over 10% of grocery purchases in the US, any reduction could lead to decreased demand for Nestlé’s products. Given that a third of Nestlé’s sales are in the US, these legislative changes could result in direct and indirect demand challenges for the company. This potential decline in consumer spending power is a key reason behind the Sell rating.

Based on the recent corporate insider activity of 11 insiders, corporate insider sentiment is neutral on the stock.