Similar to Reckitt Benckiser, Mondelez International Inc. (NASDAQ:MDLZ) announced tonight that a cyberattack in late June disrupted its shipments in the final 4 days of its second quarter. Management guided towards a 300bps company-wide reduction in Q2 sales but reaffirmed its sales guidance for at least 1% in growth in 2017 and an operating margin of mid-16% because the vast majority of sales will simply shift into Q3 as normal operations resume. However, management made a point to warn investors that the some of the holiday feature activity around July 4th would not come back. In the context of the company’s struggling Nabisco business and the broader slowdown in industry trends, Credit Suisse finds this statement material enough to merit another reduction in its annual forecast to 0.8% topline growth, now below management’s forecast for at least 1.0%.
Mondelez offers a relatively stronger topline growth rate than its declining food peers, better visibility into its margin expansion targets, and plenty of optionality in 2018 from M&A activity or another step up in its margins from exiting high cost direct store distribution. Credit Suisse's 12-month $50/share price target reflects a 20x forward multiple on an EPS of $2.47. This reflects a 10% premium to the food group which is in line with its historical relationship to US food peers.