Mondelez Stock Downgrade As Snack Demand, Cocoa Volatility Cloud Growth

DA Davidson analyst Brian Holland on Thursday downgraded the shares of Mondelez International Inc MDLZ from Buy to Neutral and raised the price forecast from $66 to $68.

The analyst cited weaker U.S. snack demand, uncertainty in emerging markets, and volatility in cocoa prices as the reasons for the downgrade.

While the stock has risen nearly 20% since early February, it's now trading above historical valuation levels.

Mondelez's strong position in emerging markets has been a key growth driver, offering the highest composite GDP growth among U.S. food peers.

However, short-term challenges such as global economic slowdown, trade tensions, inflation and geopolitical risks are dimming that outlook, noted the analyst.

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A recent IMF revision lowered the company's composite GDP growth projection by 50 basis points for 2022–2027, potentially weakening this critical growth catalyst.

Snacking demand in North America remains weak, impacting category growth despite Mondelez maintaining market share.

Sales in key segments like cookies and crackers, making up 72% of tracked sales have slowed, with modest volume gains likely driven by increased promotions and consumer trade-downs.

This points to year-over-year sales deceleration and a more competitive, uncertain environment, making it difficult to recommend the stock in the current climate, opined the analyst.

Cocoa price volatility poses the biggest risk to the Neutral rating on Mondelez. While prices have eased from December 2024 highs due to supply surplus forecasts and reduced demand, they remain flat year-over-year.

If cocoa prices stay near 2024 levels, there's potential 10% upside to FY26 estimates, the analyst said.

MDLZ Price Action: Mondelez shares traded lower by 2.17% at $65.92 at publication Thursday.

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