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Mondelez’s Latest Update Is a Positive Sign for the Stock

Mondelez International wants to make Oreos the Coca-Cola of cookies. Management’s comments at the Consumer Analyst Group’s annual conference in New York this week indicated the company is making progress, which is a positive sign for the stock.

CEO Dirk Van de Put’s comments were reminiscent of “Mondelez’s recent success in gaining share around the world with core products like Oreo,” wrote JP Morgan analyst Ken Goldman. That reinforced his own bullish stance on the stock, Goldman said, although Van de Put wasn’t breaking much new ground.

Mondelez’s success in global marketing has recently been evident, including in the company’s most recent earnings report from late January. The stock has been in the black, albeit marginally, for the past year and since early 2023, ahead of peers tracked by exchange-traded fund Consumer Staples Select Sector SPDR (XLP).

Last time at $66.60, it is up more than 11% since then Barrons recommended the stock at the end of October.

Despite being cheaper than packaging companies like Nestlé (NSRGY) and PepsiCo (PEP) and many of its consumer staples peers, Mondelez now trades at just under 21 times forward earnings, compared to less than 18 times the S&P 500
.

However, the CAGNY presentation provided further evidence that management is working to support that assessment.

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Oreo, for example, saw sales jump to $4.2 billion last year from $2.9 billion in 2018, while its share in the cookie category rose 0.6 percentage points.

Goldman, which rates Mondelez at an overweight position with a price target of $74, was particularly encouraged by the benefits the company is seeing from its continued digitization efforts, as well as higher earnings and cost savings from recent acquisitions, including Clif Bar and Tate’s Bake Shop.

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He also highlighted Mondelez’s ability to drive “key chocolate platforms and usage opportunities” and encourage people to eat and give chocolate more often. It’s not really a hard sell for many of us, especially as increased snacking seems to be one of the lasting behavior changes resulting from the pandemic.

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Elsewhere, Wells Fargo analyst Chris Carey maintained an overweight rating and $77 target price on the shares following Mondelez’s presentation. He said he was particularly interested to hear that the company’s pricing negotiations in Europe are going well.

Pricing has been a major issue for many companies, particularly food and beverage manufacturers, who have been able to raise prices to offset commodity inflation with minimal impact on sales. That’s true of Mondelez, so management’s stated plan to keep its prices above its competitors, even in a troubled territory like Europe, could be another positive sign that consumers will continue to spend on goodies.

Many factors, from the strength of the dollar to the broader market’s interest in riskier assets, could affect the stock in the near term. But to borrow a side from Coke, Mondelez is getting closer to its goal of buying the world an Oreo.

Write to Teresa Rivas at [email protected]

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