Mondelez International attracts buy rating from Mizuho with earnings upside, M&A potential highlighted
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Mizuho Securities starts off coverage of Mondelez International Inc. (NASDAQ:MDLZ) with a Buy rating on its view that the fodo giant could see a multi-year period of earnings upside which make valuation look attractive at the current level
Analyst John Baumgartner: "We believe consensus expectations through FY24 understate growth for organic revenue and adjusted EPS, given expected compound annual growth (CAGRs) of +3.2% and +7%, at the bottom of the long-term guidance range (3%+ and +HSD). We expect consistent organic revenue growth exceeding +4% and with operating leverage and efficiencies enabling EPS up to +11%; the premise behind our 411 thesis."
On the M&A front, it is noted that MDLZ is also pursuing assets that enhance capabilities and help it to expand into adjacencies including health & wellness and protein snacking. By Mizuho's math, MDLZ has added $2 billion in growth-accretive annual sales from seven acquisitions since 2018, partially funded by monetizing equity stakes in publicly-traded JDE and KDP. The firm expect additional activity will enhance category and geographic capabilities.
Mizuho assigns a price target of $77 to MDLZ vs. the average analyst price target of $72.21.