NESN: Portfolio Review And 2026 Execution Reset Are Expected To Unlock Upside

Analysts have trimmed their overall price expectations for Nestlé slightly, with our updated fair value estimate easing from CHF 88.15 to about CHF 87.69, as they factor in a mix of lower revenue growth assumptions, a marginally higher profit margin outlook, and a modestly lower future P/E. This is consistent with recent Street price target resets between CHF 76 and CHF 92.

Analyst Commentary

Street research on Nestlé is mixed, with some bullish analysts seeing room for re-rating and others staying more cautious around execution and sector-wide resets. Taken together, the views cluster around how much risk is already reflected in the share price and how quickly company performance could improve.

Bullish Takeaways

Bullish analysts argue that the current share price is factoring in what they see as excessive risk, which they believe creates upside potential if company performance meets their expectations.
The highest recent price target of CHF 92 sits above both our updated fair value estimate of about CHF 87.69 and the lower end of the Street range. This reflects confidence that the current valuation does not fully reflect future execution.
Some bullish research points to improved company performance in 2026 as a key catalyst. Investors who can wait for that potential inflection may see the risk or reward profile as more attractive.
Compared with the more cautious price targets in the CHF 70s, the CHF 86 to CHF 92 targets imply that at least part of the Street views Nestlé as better positioned than current sentiment suggests.

Bearish Takeaways

Bearish analysts have trimmed price targets into the mid CHF 70s and keep neutral ratings. This signals concern that sector-wide price resets this year could weigh on top line visibility and valuation multiples.
There is caution that any reset to margin, even if ultimately healthy, could be painful in the near term and could cap how much investors are willing to pay on a P/E basis until there is clearer evidence of improvement.
The clustering of neutral ratings around the CHF 76 to CHF 86 range suggests some investors may see limited upside versus current levels until Nestlé delivers cleaner execution and more consistent financial metrics.
With parts of the sector under review for broader price and margin adjustments, cautious research is inclined to wait for that clearing event to play out before assigning a more optimistic valuation stance.

What's in the News

Nestlé has reportedly hired advisers, including Morgan Stanley, to review options for its Blue Bottle Coffee chain, with potential outcomes said to include a sale of the business. (Reuters, M&A rumors and discussions)
Blue Bottle, in which Nestlé acquired a controlling interest in 2017 in a deal valuing the US business at about US$700m, operates around 100 outlets across the US and Asia and sells packaged coffee through retailers such as Target and Save Mart. (Key Developments)
Nestlé's new CEO Philipp Navratil has publicly indicated he is reviewing the portfolio with clear criteria on growth, returns and competitive positioning, and may choose to fix, partner or sell businesses that do not meet those criteria. (Key Developments)
The company plans to cut 16,000 jobs over the next two years, including about 12,000 white collar roles and 4,000 manufacturing and supply chain positions, representing around 6% of the workforce. (Key Developments)
Nestlé is maintaining full year 2025 sales guidance and expects organic sales growth in 2025 to be higher than the 2.2% reported for 2024, with management stating the company is on track after the first nine months. (Corporate guidance, Key Developments)

Valuation Changes

Fair Value Estimate eased slightly from CHF 88.15 to about CHF 87.69 per share.
Discount Rate remained effectively unchanged at around 3.86%.
Revenue Growth was trimmed from about 1.97% to around 1.83%.
Net Profit Margin edged higher from roughly 12.50% to about 12.60%.
Future P/E was reduced slightly from about 21.10x to around 20.91x.

Strategic shift toward premium, health-focused brands and direct consumer engagement supports growth in key markets and leverages global health and wellness trends.
Efficiency gains through digitalization and portfolio optimization enable higher marketing intensity and margin improvement, with PetCare and science-led nutrition driving structural expansion.
Margin pressure, weak demand, shifting consumer preferences, brand challenges, and constrained cash flow threaten growth prospects, profitability, and financial flexibility.

Catalysts

About Nestlé

Operates as a food and beverage company.What are the underlying business or industry changes driving this perspective?

The company is refocusing its China business from distribution-driven growth to building true consumer demand, supported by new leadership and integration under Zone AOA. This is expected to create stronger long-term momentum in a key emerging market, significantly expanding Nestlé's global revenue potential as demand recovers.
Sustained portfolio reshaping-particularly the strategic review of lower-growth value brands in vitamins, minerals, and supplements (VMS) and refocusing on premium, health-driven brands (e.g., Garden of Life, Solgar)-positions Nestlé to capture disproportionate growth from consumers' accelerating shift toward health, wellness, and science-based nutrition, which should lift top-line growth and group margins.
Continued investment in efficiency initiatives (e.g., "Fuel for Growth" savings, digitalization, AI-driven procurement, and end-to-end process automation) is already enabling higher marketing intensity without increasing costs, paving the way for margin improvement and stronger cash generation over the medium term.
Enhanced digital and e-commerce initiatives-such as improved digital shelf visibility, rapid scaling of innovation rollouts, and increased data-driven execution-are enabling faster consumer insights, more effective marketing, and direct-to-consumer opportunities, all of which should boost revenue growth and support higher operating leverage.
PetCare, coffee, and premium science-led nutrition remain structural growth engines, underpinned by the global rise in pet ownership, urbanization, and demand for science-backed and functional food solutions. These drivers, combined with recovering category momentum and capacity for further premiumization, offer potential for sustained revenue and margin expansion.

Nestlé Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Nestlé's revenue will grow by 1.8% annually over the next 3 years.
Analysts assume that profit margins will increase from 11.3% today to 12.5% in 3 years time.
Analysts expect earnings to reach CHF 12.0 billion (and earnings per share of CHF 4.65) by about September 2028, up from CHF 10.3 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 20.7x on those 2028 earnings, up from 18.7x today. This future PE is greater than the current PE for the GB Food industry at 18.6x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 3.82%, as per the Simply Wall St company report.

Nestlé Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ongoing margin pressure from elevated commodity costs (especially coffee and cocoa), adverse foreign exchange movements, and increased tariffs may not be fully offset by pricing or cost efficiencies, putting sustained downward pressure on net margins and near-term earnings.
Persistently weak consumer demand environments-especially in Greater China (Nestlé's second largest market)-combined with a transition from distribution-driven to consumer pull models, could result in prolonged revenue and market share headwinds over the next year or more.
Slower-than-expected underlying category growth in key businesses like pet care, prepared dishes, and cooking aids suggests that secular demand tailwinds may be waning or that the company is vulnerable to changing consumer preferences for fresher, less processed, or alternative food options, posing risk to long-term topline growth.
Structural challenges in pivoting certain legacy brands to restore relevance (e.g., Gerber in US Nutrition), and the need for strategic reviews or potential divestment (e.g., mainstream VMS brands after recent acquisitions), indicate risk of brand erosion and difficulties capturing growth in health-conscious and premium categories, impacting revenue stability and group portfolio profitability.
Working capital outflows, declining free cash flow (not covering the dividend in H1), and a stretched balance sheet highlight execution risk on deleveraging and the need for robust operational discipline; rising input and inventory costs could further pressure free cash generation and restrict financial flexibility.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of CHF86.232 for Nestlé 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 CHF103.0, and the most bearish reporting a price target of just CHF71.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CHF96.0 billion, earnings will come to CHF12.0 billion, and it would be trading on a PE ratio of 20.7x, assuming you use a discount rate of 3.8%.
Given the current share price of CHF74.71, the analyst price target of CHF86.23 is 13.4% 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.

Have other thoughts on Nestlé?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

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.

NESN: Recent Leadership Changes Will Likely Restore Stability And Reverse Share Slide