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On Tuesday, Deutsche Bank analysts adjusted their financial outlook for Nestle SA (SIX:NESN), citing recent fluctuations in foreign exchange rates as a primary factor. The price target for the Swiss multinational food and drink corporation was reduced from CHF85.00 to CHF84.00, while the firm maintained its Hold rating on the stock.
The revision in Nestle (NSE:NEST)’s price target reflects Deutsche Bank’s updated forecasts, which take into account the significant impact of foreign exchange movements. Despite this adjustment, the analysts continue to expect Nestle to achieve a like-for-like growth of 3.6% for the year 2025, with real internal growth (RIG) of 1.2% and a pricing increase of 2.3%. These figures are anticipated to rise slightly in the second half of the year, with RIG reaching 1.5% and pricing at 2.6%.
Due to the exchange rate volatility, the analysts have lowered their earnings per share (EPS) estimate for Nestle by 4.3% for the fiscal year 2025 and by 5.6% for 2026. This revision places Deutsche Bank’s projections 1.0% below the consensus for 2025 and 3.2% below for 2026.
While acknowledging the operational improvements Nestle has made and the normalization of its marketing expenditures, Deutsche Bank highlighted that the company’s stock is trading at approximately 20 times forward 12-month earnings. Additionally, they noted that the stock has returned to an all-time low earnings yield premium when compared to the US 10-year Treasury note.
The analysis also mentioned that traditionally, consumer staples earnings tend to underperform in periods when the US dollar is declining. However, this usually occurs during times of faster GDP growth, suggesting that the current weakening of the dollar may be associated with a more risk-averse market sentiment.
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