Analysts lowered their target prices
Recently, multiple analysts lowered their target prices on both Mondelēz (MDLZ) and the Hershey Company (HSY) stock, as analysts believe that increasing pricing to offset the impact of higher raw materials and transportation costs will not be easy for packaged food manufacturers, especially amid soft demand and a tough retail environment.
Meanwhile, lower net price realizations are likely to further squeeze the margins of food companies. The strengthening US dollar could also remain a drag on sales and profitability.
UBS lowered its target price on Mondelēz to $50 from $52. Meanwhile, Bernstein reduced it to $55 from $57 per share. Also, RBC lowered its target price to $51 from $54.
As for Hershey, Bernstein cut its target price for the stock to $109 from $111. BofA Merrill Lynch also lowered its target price on Hershey stock to $92 from $100. Credit Suisse downgraded Hershey stock to an “underperform” in June.
Ratings summary and target price
Most analysts have maintained “buy” ratings on Mondelēz stock. Among the 22 analysts covering Mondelēz stock, 77.0% have suggested “buys,” and 23.0% have suggested “holds.” Analysts have a consensus target price of $48.24 on MDLZ, indicating a potential upside of 12.6% based on its closing price of $42.83 on July 17.
A total of 60.0% of the 20 analysts covering Hershey have maintained “holds” on its stock, while 30.0% have suggested “sells,” and 10.0% have suggested “buys.” The stock closed at $93.56 on July 17, almost on par with analysts’ consensus target price of $94.11.