Mondelez International's (MDLZ) strong Q3 earnings delivery and reiterated outlook support its growth prospects despite incremental cost pressures, although the recent share-price rally leaves a balanced risk/reward at current levels, UBS Securities said.
The company reported Q3 EPS of $0.78, above UBS's forecast and Street consensus, as stronger margins more than offset in-line organic sales growth. The company currently expects Q4 EPS of $0.74 to $0.89, compared with Street consensus of $0.93.
Mondelez expects full-year 2026 organic sales growth of at least 2%, including a 1.5% tailwind from foreign exchange, versus UBS's forecast of 2.3%. It expects EPS to grow between flat and 5% in constant currency, with a $0.04 tailwind from foreign exchange, according to the note Friday.
Management pointed out some timing differences between Q3 and Q4 gross margins related to cocoa hedge phasing, with gross margins expected to be slightly higher in Q4 and strong gross profit dollar growth still expected.
Management remains confident in the volume trajectory despite the challenging commodity environment, while productivity is expected to provide an additional benefit in 2027, the note added.
UBS maintained its neutral rating on Mondelez and raised its price target to $72 from $68.
The company's shares were up 2% in Monday afternoon trading.
Price: 66.22, Change: +1.28, Percent Change: +1.97
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