Nomura Securities Starts Mondelez International (MDLZ) at Reduce

After the close, Nomura Securities initiated coverage on Mondelez International (NASDAQ: MDLZ) with a Reduce rating and a price target of $31.00.

Analyst David Hayes comments, "Since separating from Kraft in 3Q12, Mondelez (MDLZ) has reached a FY14E P/E of c20x, which suggests consensus accepts its targets for organic sales growth (mid-term 5-7%) and better margins (up to +400bp in three years). We believe both could disappoint. MDLZ has good emerging market (EM), (c40% of sales) and category exposures (snacks, confectionery and coffee provide
more scope for innovation than many food categories). Successfully exploiting that exposure, though, will require a fine balance of investment to realise sales potential profitably. Structural sales trends are less supportive. Increasing ‘cost to serve’ may subdue margin aspirations and cash generation. Our USD 31 TP implies a next 12 months’ (NTM) P/E of 16x and total shareholder return (TSR) of -6%; we thus initiate coverage of MDLZ with a Reduce rating."

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 $34.23 yesterday.

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