Cost Cuts and Potential Kraft-Heinz (KHC) Bid Could Be Next for Mondelez (MDLZ) - RBC
Get Alerts MDLZ Hot Sheet
Rating Summary:
27 Buy, 4 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 11 | New: 43
Join SI Premium – FREE
RBC Capital analyst David Palmer weighed in on what Mondelez's (NYSE: MDLZ) dropped bid for Hershey (NYSE: HYS) means for the company.
Palmer said while Mondelez could look for other acquisitions, they continue to believe the company will drive earnings growth through internal cost measures ahead of a potential acquisition bid by Kraft-Heinz (NYSE: KHC).
"While we cannot know for certain what motivated Mondelez to attempt this deal now, we suspect the company did believe it had somewhat of a chance to acquire one of the world's most sought after CPG assets amid a time of extraordinary pressure to create shareholder value," he commented.
He added, "Mondelez remains a significant under-earner in US Food ('16E EBIT margin 15.4% versus sector average 17.5%) and, in our view, remains the most logical next acquisition target of 3G Capital-controlled Kraft-Heinz. While global category growth has slowed modestly (baseline sales in measured channels down 0.4% in the 12 weeks ending 8/13 versus up 1.8% in the 12 weeks ending 5/21), the company still participates in growth ~2pp higher than peers amid a favorable cost environment, providing clear line of sight to differentiated long-term top- and bottom-line growth."
The firm maintained an Outperform rating and $54 price target on Mondelez.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Bodycote Plc. (BOY:LN) (BYPLF) PT Raised to GBP7.20 at RBC Capital
- Adverum Biotechnologies (ADVM) PT Lowered to $2 at RBC Capital Following Earnings
- Mondelez International (MDLZ) named Best Idea in Europe at TD Cowen
Create E-mail Alert Related Categories
Analyst Comments, RumorsRelated Entities
RBC Capital, Earnings, Definitive AgreementSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!