Mondelez International is pushed to the ratings sideline at UBS
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UBS dropped its rating on Mondelez International (NASDAQ:MDLZ) to Neutral from Buy due to concerns macro headwinds will impact earnings.
Analyst Cody Ross pointed to a ~3% FX headwind to revenue from the strengthening dollar, low double-digit inflation, and increasing interest expense from rising interest rates as factors that will hit earnings in 2023.
"While we applaud management for using all levers at its disposal (revenue growth management, productivity, and superior supply chain) to manage a difficult operating environment, we believe it will be challenging for MDLZ to grow (real) EPS much higher than ~4% next year."
On the valuation front, UBS said MDLZ is trading at a 30% premium to the S&P 500, which is noted to be well above its historical average of ~5%.
MDLZ opened on Thursday with a 0.25% dip to $67.80. For its part, UBS assigned a price target of $71 to MDLZ vs. the 52-week trading range for the food stock of $54.72 to $69.47.