Last Update 31 Oct 25
Fair value Decreased 4.26%Analysts have lowered their average price target for Mondelez International by approximately $3 to about $69.60. This change reflects a subdued sales growth outlook, recent margin pressures, and more cautious earnings estimates for 2025 and 2026.
Analyst Commentary
Recent analyst reports reflect both optimism and caution regarding Mondelez International's prospects following its recent earnings period and revised guidance. The commentary highlights areas of strength as well as challenges that could impact the company's outlook and valuation.
Bullish Takeaways
- Some bullish analysts continue to believe Mondelez is a compelling long-term play, citing a reasonable valuation and the potential for earnings per share growth by 2026 despite current pressures.
- Analysts note confidence that improving cocoa costs could support EPS growth and margin recovery in 2026, which could provide an opportunity for profitability improvement if commodity trends remain favorable.
- Plans to reinvest cost savings, particularly from cocoa deflation, into pricing and advertising are seen as strategic steps that could enhance brand strength and support long-term growth.
- Efforts to upgrade the U.S. supply chain are viewed positively as they could drive further cost savings and improve production flexibility.
Bearish Takeaways
- Bearish analysts point to disappointing sales growth trends and margin headwinds, notably driven by higher price elasticity in Europe and pockets of emerging market weakness.
- Multiple firms have cited recent quarterly results as indicative of persistent category-wide challenges across consumer staples, which could affect both demand and the earnings outlook for 2025 and beyond.
- Lowered price targets reflect more cautious forecasts around sales, earnings, and valuations, as analysts adjust estimates downward in light of an uncertain demand environment.
- There are concerns that while cocoa prices may moderate, the benefit to earnings could be limited if savings are reinvested instead of contributing to significant near-term profit growth.
What's in the News
- Mondelez is using a newly developed AI tool with Accenture to reduce marketing content production costs by 30% to 50%. This initiative aims to enable rapid creation of short TV ads as soon as next year's holiday season. (Reuters)
- The company is working to transition products to natural food dyes in response to evolving consumer preferences and local regulations. There is currently no set deadline for completion. (Reuters)
- Jon Halvorson, Mondelez's global senior vice president of consumer experience, is expected to be named chief marketing officer at Kenvue. This follows his eight-year tenure at Mondelez. (The Wall Street Journal)
Valuation Changes
- Consensus Analyst Price Target has fallen from $72.71 to $69.61. This reflects a more conservative outlook on the stock’s fair value.
- Discount Rate remains unchanged at 6.78%.
- Revenue Growth expectations have been lowered slightly, from 4.62% to 4.34% projected annually.
- Net Profit Margin has decreased marginally, from 11.04% to 10.81%. This signals revised expectations for profitability.
- Future P/E Ratio projections have dipped from 22.12x to 21.24x, indicating a modest reduction in anticipated earnings multiples.
Key Takeaways
- Mondelez's global pricing strategy and strategic growth agenda aim to increase revenue and market share, especially in Europe and emerging markets.
- Innovative brand activations and sustainability initiatives are expected to enhance consumer engagement, brand loyalty, and long-term value creation.
- Elevated cocoa costs and decreased consumer demand are pressuring profit margins, with potential risks from economic uncertainties and trade tensions impacting future revenues.
Catalysts
About Mondelez International- Through its subsidiaries, manufactures, markets, and sells snack food and beverage products in the Latin America, North America, Asia, the Middle East, Africa, and Europe.
- Mondelez International is executing a robust pricing strategy in response to high cocoa costs, which is expected to improve revenue as pricing takes effect globally, especially in markets like Europe and emerging markets.
- The company is implementing a strategic growth agenda that includes reinvesting in brands, expanding distribution, and strengthening market presence, which should positively impact revenue growth and market share.
- Mondelez’s focus on innovative brand activations and product collaborations, like the Oreo and Post Malone partnership and Cadbury Dairy Milk with Lotus Bakeries, are expected to enhance consumer engagement and drive revenue growth.
- The ongoing investment in sustainability initiatives, such as scaling the Cocoa Life program and reducing carbon emissions, is likely to support long-term value creation and enhance brand loyalty, potentially improving net margins.
- Mondelez continues to expand its presence in emerging markets, adding over 100,000 stores, which is expected to drive growth in market share and revenue as consumer confidence stabilizes and economic conditions improve in these regions.
Mondelez International Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Mondelez International's revenue will grow by 4.8% annually over the next 3 years.
- Analysts assume that profit margins will increase from 9.8% today to 11.1% in 3 years time.
- Analysts expect earnings to reach $4.7 billion (and earnings per share of $3.8) by about September 2028, up from $3.6 billion today. The analysts are largely in agreement about this estimate.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.4x on those 2028 earnings, up from 22.2x today. This future PE is greater than the current PE for the US Food industry at 19.5x.
- Analysts expect the number of shares outstanding to decline by 3.23% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.
Mondelez International Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Elevated cocoa costs significantly impacted adjusted gross profit and consequently affected EPS, posing a risk to net margins if prices remain high or increase further.
- North America experienced a decline due to retailer destocking and softer consumer demand, particularly from lower-income households, which could continue to pressure earnings and margins.
- Volume/mix was down 3.5% due to elasticity, with potential future risks if consumers continue to react negatively to higher prices, leading to revenue challenges.
- Consumer confidence in key markets like Brazil, Mexico, and China is soft due to economic uncertainty, which could impact demand and subsequently revenue and earnings growth.
- Increasing trade tensions and potential tariff impacts, although manageable now, could create future expense pressures or require strategic adjustments, affecting net profits.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $74.417 for Mondelez International based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $88.0, and the most bearish reporting a price target of just $67.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $42.7 billion, earnings will come to $4.7 billion, and it would be trading on a PE ratio of 22.4x, assuming you use a discount rate of 6.8%.
- Given the current share price of $62.57, the analyst price target of $74.42 is 15.9% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.