Canaccord Buying The Dip On Mondelez, Upgrades Stock After Surprise Announcement

• Mondelez International Inc MDLZ shares have been volatile over the last one year, and are down 15 percent since January 4.
• Canaccord’s Alicia Forry upgraded the rating for the company from Hold to Buy, with a price target of $44.
• The decline in the company’s share price offers an attractive opportunity to invest in a business that is improving off a very low base, Forry stated.

Analyst Alicia Forry mentioned that the pullback in shares following Mondelez’s announcement that further actions to adjust its portfolio in 2016 would weigh on its top line could have been avoided through better communication.

A close analysis of the company’s announcements reveals an “unchanged strategy and a business that is improving off a very low base,” Forry stated. He added that several positive points were being overlooked.

“Underlying sales growth accelerated throughout the year even as the category slowed. China remains in growth, up high single digits over the FY, though this slowed in Q4 unsurprisingly; we note there is still plenty of white space in this market for MDLZ to capture,” the analyst wrote.

While the company’s 2016 organic sales growth guidance appeared cautious, reflecting a slower snacks market, the picture looks better if the distorting effects of the Venezuela deconsolidation and portfolio rationalization in FY15 and FY16 are stripped out, Forry noted.

Mondelez is expected to continue focusing on cost savings and forex headwinds are likely to ease in 2016.