Mondelez Remains This Analyst's Top Pick For Global Staples Investors Despite FX Drag

Mizuho analyst John Baumgartner reiterated a Buy rating on the shares of Mondelez International Inc (NASDAQ: MDLZ) and lowered the price target from $75 to $70.
The analyst said Mondelez exited Q2 with FY22 guidance, effectively embedding H2 uncertainties from potential disruptions tied to a second round of price increases in Europe and potentially larger elasticities from sustained consumer inflationary pressures.
Material dislocations in Europe appear unlikely, Mizuho Global Food Demand Index suggested demand across emerging markets remained strong, and in the U.S., category retail elasticities for cookies & crackers remain muted, added Baumgartner.
Mondelez appeared poised for share growth in FY23 from recovery across Local Jewels brands, accretive chocobakery portfolio, and distribution across emerging markets.
Baumgartner noted he was confident modeling 4%+ organic sales in FY23, but uncertainties pertain to EBIT growth considering inflation and reinvestments.
Headwinds related to third-party labor shortages, and a supply/demand imbalance for trucking capacity and containers, have pressured distribution of cookies and crackers in FY22.
The analyst mentions that Mondelez is expanding manufacturing and warehousing capacity and has guided for recovery in H2.
Baumgartner specified that BRIC countries comprise nearly 40% of global consumption for commodities, including sugar and vegetable oils, the key ingredients in the company’s portfolio.
Finally, the analyst reiterated the resilience of global snacking and said strong execution should limit downside risks to FX-neutral growth through FY23.
Mondelez will release its third quarter 2022 financial results on November 1, 2022.
Price Action: MDLZ shares are trading lower by 0.19% at $61.59 on the last check Monday.
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