Mondelez International (MDLZ) has been downgraded by Citi, with a revised price target of $63, down from $71, following a Q4 2024 earnings miss and a cautious 2025 outlook. The report highlights a 4Q EPS miss, only the second in eight years, and a 2025 EPS forecast over 10% below consensus. Despite this, Citi maintains a "Buy" rating, citing potential upside if Mondelez exceeds its conservative guidance, as it has in past years.
The report centers on Mondelez's 2025 guidance, which includes a 5% organic sales growth (OSG) and an EPS of approximately $2.90. Key challenges include elevated cocoa prices and a reliance on multiple rounds of pricing to offset inflation. The company anticipates a volume inflection in North America, despite disappointing snacking trends, and assumes a lower elasticity of 0.4-0.5. Citi notes, "We see more upside potential to earnings this year than downside," but acknowledges risks in the guidance.
Citi has adjusted its 2025 EPS estimate to $2.91 from $3.27, reflecting the lower earnings outlook. The report also considers macroeconomic factors such as interest expenses and tax rates, which are expected to be headwinds. Mondelez's strategy includes productivity savings and a $3 billion share repurchase plan.
Mondelez closed at $56.12, down 2.25%, with an after-market decline of 4.69% to $53.49 on February 4.