Investing.com– Wells Fargo downgraded Mondelez International Inc (NASDAQ:) to “equal weight” from “overweight,” slashing its price target to $61 from $74. Brokerage noted escalating macroeconomic challenges, including soaring cocoa costs and unfavorable foreign exchange impacts.
Though Mondelez has a strong execution in the staples sector but the external pressures are undermining its earnings outlook. Cocoa prices, a significant cost driver, are projected to rise 68% in 2025 and 37% in 2026, potentially increasing cost of goods sold by 19% and 15% over the two years, respectively.
“MDLZ is executing amongst the best in staples, but the problem is that the company also has amongst the worst macro headwinds in all of staples too,” analyst wrote.
Currency fluctuations compound the issue, with FX headwinds expected to reduce 2025 sales by 3.6%, translating to a potential 7% hit to earnings per share. Wells Fargo (NYSE:) now forecasts 2025 and 2026 EPS at $3.18 and $3.39, falling 6% and 11% below consensus estimates.
Despite robust organic sales growth, the margin pressure from commodities and currency leaves little room for optimism.
Wells Fargo noted Mondelez’s operational strengths but stated, “ultimately, stocks are driven by earnings, and for now, we just see too much earnings risk to stay Overweight.”
