On Thursday, Bernstein SocGen Group revised its price target for Nestle SA (SIX:NESN:SW) (OTC: NSRGY (OTC:NSRGY)), decreasing it to CHF73 from the previous CHF80, while the Market Perform rating was sustained. The adjustment reflects concerns over potential negative revisions in 2025, as the company may face challenges from increased commodity prices for cocoa, coffee, and dairy.
The food products giant, with a market capitalization of $212 billion and annual revenue exceeding $102 billion, currently trades near its 52-week low, offering a dividend yield of 3.34%. According to InvestingPro analysis, Nestle (NS:NEST) appears slightly undervalued at current levels.
The analyst at Bernstein SocGen Group remarked on the factors influencing the decision, noting that despite recent de-rating, Nestle's stock is not considered inexpensive, trading at its long-term average enterprise value to earnings before interest, tax, depreciation, and amortization (EV/EBITDA) ratio.
InvestingPro data shows the current EV/EBITDA at 12.99x, with the company maintaining strong profitability metrics and a 28-year track record of dividend increases. The caution against shorting the stock prior to the Annual General Meeting (AGM) in April was advised due to the potential for board changes, which could act as a positive catalyst.
The new target price for Nestle is based on an EV/EBITDA multiple of 10.9x, a reduction from the previous multiple of 11.2x. This multiple is applied against a lowered forward next twelve months plus one (NTM+1) EBITDA estimate of CHF 19,756. The analyst highlighted the necessity to revise down the Target (NYSE:TGT) Price in response to the anticipated re-investment and commodity inflation pressures.
Despite the reduced price target, the Market Perform rating indicates that Bernstein SocGen Group's outlook on Nestle's stock remains neutral, suggesting that the stock is expected to perform in line with the broader market expectations.
Investors and stakeholders of Nestle will be watching closely as the company approaches its AGM in April, which could potentially introduce changes to the board and influence the stock's performance. The revised price target of CHF73 will be a key figure to monitor as it represents the firm's current valuation assessment of Nestle shares.
In other recent news, Nestle SA has been the focus of various analyst activities and internal changes.
Jefferies downgraded Nestle SA stock from Hold to Underperform, adjusting their price target from CHF82.00 to CHF67.00 due to concerns about the late implementation of cost-cutting measures and ongoing inflation for key inputs.
On the other hand, Goldman Sachs initiated coverage on Nestle with a Buy rating, acknowledging its strong market presence in several attractive segments. RBC Capital maintained its Outperform rating on Nestle, forecasting a 17.6% EBIT margin for 2027 despite a slight decrease in the 2025 estimated EBIT margin due to rising cocoa and coffee prices.
Morgan Stanley (NYSE:MS) upgraded Nestle's rating from Underweight to Equalweight, albeit reducing its price target. The firm expects downward revisions to Nestle's sellside estimates, aligning with the company's new operational goals. Redburn-Atlantic also adjusted its financial outlook for Nestle, reducing the price target but maintaining a Neutral stance.
These are among the recent developments impacting Nestle's financial outlook. The company's strong market position, robust revenue, and consistent dividend payments have drawn attention from various analyst firms as Nestle continues to refine its business strategy under new leadership.
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