Credit Suisse Believes FX, Economic Uncertainty In Europe Pose Risk For Mondelez

Credit Suisse analyst Robert Moskow reiterated an Outperform rating on the shares of Mondelez International Inc MDLZ and lowered the price target to $67 from $70.
The analyst finds it difficult to reconcile company management's positive tone with the challenging economic developments unfolding in Europe.
Meanwhile, the analyst raised topline growth to 9% because management indicates that elasticities have held up better than the conservative assumptions they provided in their 2H guidance.
The management also described sales trends in Europe as relatively unchanged from 1H and said that price negotiations in the region passed through as expected with only modest disruptions.
Moskow said with economic conditions in the region in such a state of flux, investors hoping that management will return its guidance to the high end of its MSD-HSD EPS range might be disappointed.
The analyst lowered the FY22 EPS estimate by $0.04 to $2.82, assuming an incremental FX headwind of $0.06 to EPS and a $0.03 reset in the 2021 EPS base from reducing the equity stake in JDEP and divestitures.
Given that pricing passed through smoothly, the company should have some upside to drop to the bottom line, added Moskow.
Despite the cloudier outlook for Europe, he expects sales guidance to revise positively to more than 9% from 8%.
The analyst noted that Nielson tracking data indicates 9% sales growth in the U.S., with pricing climbing to 18% and volume down -9%.
Market share in North American biscuits remained pressured owing to supply chain constraints, exacerbated in part by the company's supply chain consolidation.
Investor Relations said that the European data does not accurately reflect the company's performance, thus making the situation difficult to evaluate, noted Moskow.
Price Action: MDLZ shares are trading higher by 1.40% at $58.25 on the last check Tuesday.

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