Nestlé: Credit Suisse still not a buyer.
(CercleFinance.com) - In turn, Credit Suisse is taking a look at the surprise arrival of the activist investment fund Third Point in Nestlé's capital.
Third Point intends to "shake up" management of the Vevey agri-food giant and in particular calls for the revision of forecasts, the sale of the group's stake in L'Oréal and repurchase of shares. This is not really impressing Credit Suisse, which still recommends investors sell the Nestlé stock ("underperform" rating), with a target price of 75 Swiss francs.
Indeed, Third Point, a Nestlé shareholder, is blaming the Swiss agri-food group for a strategy that it deems is outdated. And it is calling for a review of the group's brand portfolio, raising its operating margin target from 18% to 20% by 2020, the sale of its stake in L'Oréal and share buybacks. In short, the fund wants the group's new boss, Mark Schneider, to be ambitious.
However, according to Credit Suisse, these requirements are nothing particularly new: they are even "almost a carbon copy of the conclusions from Unilever's 'Comprehensive Review' in April", the bank's research report almost mocks.
And finally, at its current price, the Nestlé share already integrates the prospect of an operating margin of 19% by 2020 and a 40 billion Swiss franc share buyback, Credit Suisse estimates. In addition, the Nestlé share is trading at a 2018 P/E of 22x, higher than that of Unilever, while no (clear) roadmap has been announced.
Copyright (c) 2017 CercleFinance.com. All rights reserved.
Third Point intends to "shake up" management of the Vevey agri-food giant and in particular calls for the revision of forecasts, the sale of the group's stake in L'Oréal and repurchase of shares. This is not really impressing Credit Suisse, which still recommends investors sell the Nestlé stock ("underperform" rating), with a target price of 75 Swiss francs.
Indeed, Third Point, a Nestlé shareholder, is blaming the Swiss agri-food group for a strategy that it deems is outdated. And it is calling for a review of the group's brand portfolio, raising its operating margin target from 18% to 20% by 2020, the sale of its stake in L'Oréal and share buybacks. In short, the fund wants the group's new boss, Mark Schneider, to be ambitious.
However, according to Credit Suisse, these requirements are nothing particularly new: they are even "almost a carbon copy of the conclusions from Unilever's 'Comprehensive Review' in April", the bank's research report almost mocks.
And finally, at its current price, the Nestlé share already integrates the prospect of an operating margin of 19% by 2020 and a 40 billion Swiss franc share buyback, Credit Suisse estimates. In addition, the Nestlé share is trading at a 2018 P/E of 22x, higher than that of Unilever, while no (clear) roadmap has been announced.
Copyright (c) 2017 CercleFinance.com. All rights reserved.