Mondelez (MDLZ) Added to Focus List at Credit Suisse

Credit Suisse maintained an Outperform rating on Mondelez International (NASDAQ: MDLZ) price target of $42. The stock was also added to its Focus List. Analyst Robert Moskow thinks the stock represents the most compelling risk-reward proposition in our coverage space of food.

"This is an ideal entry point because the stock's underperformance began well before the recent market weakness in October due to concerns that management's turnaround efforts had stalled," said Moskow. "Management has bold margin target goals, and we think they can do better. Our analysis indicates that the company has the potential to boost its margins by 700-800 bps, well above management's goal of 300-400 bps, if it fully implements zero-based budgeting practices and reduces its excessive overhead costs."

"Our margin expansion assumption includes 100 bps of margin leverage from making better pricing decisions. This includes raising price or reducing promotion modestly in the markets where market share is 70% or higher than its nearest competitor and making more conservative decisions in markets without clear leadership," he added. "Enormous asset value. If management fails to turn the business around, we believe the board will find another party to run it, either by selling the business to a strategic acquirer or to a private equity firm in a leveraged buyout. The addition of activist investor Nelson Peltz to the board increases management's sense of urgency and opens up the possibility for alternative avenues for value creation."

For an analyst ratings summary and ratings history on Mondelez International click here. For more ratings news on Mondelez International click here.

Shares of Mondelez International closed at $33.23 yesterday.

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