On Wednesday, RBC Capital maintained its Outperform rating on Nestle SA (SIX:NESN:SW) (OTC: NSRGY (OTC:NSRGY)), with a steady price target of CHF93.00. The firm's analysis recognized the impact of rising cocoa and coffee prices on the company's near-term margins but considered these effects minimal to their medium-term forecasts.
The analyst from RBC Capital noted a downward revision in the 2025 estimated EBIT margin, adjusting the figure from 16.5% to 16.1%. This change reflects the significant ongoing rise in cocoa and coffee prices, which have continued to climb since the margin forecast was previously reduced in September.
Despite the immediate pressure from commodity costs, RBC Capital sees the current situation as a minor setback. The firm's medium-term outlook remains optimistic, with an EBIT margin forecast of 17.6% for 2027, indicating confidence in Nestle (NS:NEST)'s future profitability.
The reaffirmation of the CHF93.00 price target suggests that the firm believes the current commodity price challenges will not have a lasting impact on Nestle's valuation. The analyst's statement underscores the belief that the recent margin adjustment does not materially affect the long-term investment thesis for Nestle.
In summary, RBC Capital's stance on Nestle reflects a belief in the company's resilience and potential for growth, despite short-term headwinds from increased input costs. The firm's unchanged price target points to a conviction in Nestle's ability to navigate market fluctuations and deliver on its future financial goals.
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