Why Mondelez (MDLZ) Could Reach $35

Story updated at 9:50 a.m. with market information.

NEW YORK (TheStreet) -- Credit Suisse lowered its price target for Mondelez (MDLZ) to $35 from $37 following the company's fourth-quarter results and lowered guidance.

Shares of Mondelez gaine 1.3% to $33.65 in morning trading Thursday.

The analyst firm maintained its "neutral" rating for the company, but also lowered its estimates through 2015.

The firm wrote, "Following MDLZ's rather messy 4Q results, we are lowering our target price to $35 to reflect an 18x P/E multiple against our 2015 estimate of $1.88 (down from $1.92). We are lowering our 2014 EPS estimate to $1.68 (down from $1.71), which represents the middle of management's EPS guidance for 2014 (including 7c FX headwind)."

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Separately, TheStreet Ratings team rates MONDELEZ INTERNATIONAL INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate MONDELEZ INTERNATIONAL INC (MDLZ) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MDLZ's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 1.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 57.0% when compared to the same quarter one year prior, rising from $652.00 million to $1,024.00 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that MDLZ's debt-to-equity ratio is low, the quick ratio, which is currently 0.65, displays a potential problem in covering short-term cash needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • MONDELEZ INTERNATIONAL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MONDELEZ INTERNATIONAL INC reported lower earnings of $0.87 versus $1.99 in the prior year. This year, the market expects an improvement in earnings ($1.56 versus $0.87).
  • You can view the full analysis from the report here: MDLZ Ratings Report

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