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UBS has rated Nestlé S.A. as "Neutral" with a target price of 83 francs. As the largest food group globally, Nestlé"s sales are diversified across various sectors, including beverages (26.7%), pet food (20.3%), and pharmaceuticals (16.4%), with significant market presence in the USA and Canada (35%).
Nestlé is spinning off its water business, including brands like Perrier and S. Pellegrino, due to low profitability and ongoing controversies surrounding water rights and environmental impact. The company, which struggled to position water as a luxury product, will seek partnerships or sales starting in 2025. With an operating profit margin of around 10%, significantly lower than its coffee segment, Nestlé"s decision reflects the challenges of monetizing bottled water amid growing scrutiny over its practices.
UBS AG has maintained a "Neutral" rating for Nestlé, setting a target price of 83 francs, following a capital markets day. Analyst Guillaume Delmas noted that the food group anticipates investments to boost organic sales growth to 4% in the medium term, slightly above the consensus of 3.8%. Expectations for medium-term margin targets are expected to remain stable.
Nestle SA plans to spin off its water brands into a standalone business by 2025, aiming to enhance growth through increased advertising and marketing spending, projected to reach 9% of sales. The company targets savings of 2.5 billion Swiss francs by 2027 through cost-cutting measures, which will fund further investments. Key initiatives are already underway in procurement, commercial investments, and structural costs.
UBS has maintained a "Neutral" rating for Nestlé, setting a target price of 83 francs, as the company anticipates a medium-term organic sales growth of 4%. Currently trading at CHF 77.12, Nestlé shares have declined by 18.3% since the start of 2024, with Q4 2024 results expected on February 13, 2025.
UBS has maintained a "Neutral" rating for Nestlé, setting a target price of 83 francs, following a capital markets day. Analyst Guillaume Delmas noted that the food group anticipates investments will boost organic sales growth to 4% in the medium term, slightly above the consensus of 3.8%. Expectations for medium-term margin targets are not expected to change significantly.
Nestlé S.A., the world"s leading food group, generates sales across various product families, including powdered and liquid beverages (26.7%), pet food (20.3%), and pharmaceutical, nutrition, and wellness products (16.4%). Geographically, the company sees significant sales in the United States and Canada (35%), followed by Asia and Oceania (21.4%) and Latin America (13.7%).
Nestlé"s new CEO, Laurent Freixe, plans to enhance the brand"s growth by increasing marketing investments to 9% of sales and implementing cost-cutting measures to save at least CHF2.5 billion by 2027. The company will also operate its water division as an independent unit starting January 1, 2025, while aiming for organic sales growth of over 4% in the medium term.
Nestlé"s new CEO, Laurent Freixe, has unveiled a strategy aimed at steering the company back on course, which includes significant cost savings of 2.5 billion francs. Additionally, he plans to spin off the water business as part of this restructuring effort.
An investor with a 5.623% stake in Hochdorf Holding AG is positioned to influence key corporate decisions, coinciding with UBS"s ambitions for US growth and Nestlé"s strategic insights during its capital markets day. These developments may reshape market dynamics, as UBS navigates the integration of Credit Suisse clients and Swiss trade data alongside Sonova Holding AG’s earnings report provides further economic context.
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