Credit Suisse lowers target price on Mondelez

by Eric Schroeder
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Credit Suisse lowered its target price on Mondelez International to $46 from $50.
 

NEW YORK — Credit Suisse on Aug. 30 lowered its target price on Mondelez International, Inc. to $46 from $50, reflecting the rating agency’s feeling that a near-term takeout is not on the horizon.

Robert Moskow, Credit Suisse
Robert Moskow, research analyst with Credit Suisse

“In an interview with CNBC today, Kraft Heinz board member Warren Buffet used surprisingly terse and blatant words to reject the idea of Kraft Heinz making a bid for Mondelez and reuniting the two companies that split up in 2012,” Robert Moskow, research analyst, wrote in the Aug. 30 report. “While we know it is not wise to hang on every word that comes from Kraft Heinz about its M.&A. objectives, we found these comments too black-and-white to ignore.”

Kraft Heinz earlier this year briefly pursued an acquisition of Unilever P.L.C. before withdrawing its offer. Although no deal was completed, the action prompted talk that Kraft Heinz may be looking to broaden its business.

 

Despite his belief that a near-term takeout is low, Mr. Moskow said Credit Suisse still views Mondelez as being fully capable of generating earnings-per-share growth above its peer group. Mr. Moskow cited the company’s strategic plan for margin expansion as well as its potential role in consolidating the food industry as reasons behind his expectations.

“Incoming c.e.o. Dirk Van de Put is an unknown entity, but we would be highly surprised if he took actions to roll back either of these board imperatives,” Mr. Moskow said.

Mr. Van de Put was tapped as Deerfield, Ill.-based Mondelez’s new c.e.o. earlier this month when Irene Rosenfeld announced her intent to step down from the post in November. Mr. Van de Put had been c.e.o. of McCain Foods, a privately held Canadian frozen food manufacturer with sales of approximately $7.3 billion.

Dirk van de Put, Mondelez
Dirk Van de Put was tapped as Mondelez’s new c.e.o. earlier this month. 
 

In addition to lowering its target price, Credit Suisse maintained its “outperform” rating on Mondelez’s stock.

Risk factors that may impede achievement of the $46 target price and the outperform rating include volatile macro conditions in emerging markets, continued shifting to healthier, less sugary snacks, and input cost increases that management cannot cover with pricing, Mr. Moskow said.  
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