Analysts at Morgan Stanley followed up on their recent meetings with management at Mondelez International Inc MDLZ 1.38%, Hershey Co HSY 0.18% and Pinnacle Foods Inc PF 0.98% by releasing a report on the key takeaways from the meetings.
Morgan Stanley sat down with the three companies at its Consumer Staples Corporate Access Days event this week.
Mondelez
Analysts meeting with Mondelez management convinced them that the company should have no problem meeting or exceeding its goals of 2.0 percent revenue growth and 14 percent EBIT margins in 2015. In fact, analysts anticipate upside to these targets and believe that Mondelez could begin to outperform its guidance as soon as Q2.
According to the report, strong margin expansion will be the primary driver for the stock moving forward.
Morgan Stanley has an Overweight rating on Mondelez.
Hershey
Weakness in China was a major issue for Hershey in Q1, as China growth swung from +40 percent in Q4 to -47 percent in Q1. Hershey plans to shift its strategy in China to combat slower consumer spending by diversifying in Tier 2/3 cities, increasing its e-commerce offerings and decreasing its hypermarket reliance.
Analysts are not convinced that Hershey will be able to meet its 20 percent sales growth guidance for 2015.
Morgan Stanley has an Equal Weight rating on the stock.
Pinnacle Foods
Pinnacle Foods intends to continue its quest to boost revenue by innovation in its healthier food lines, including Birds Eye Flavor Full and Protein Blends. In addition, Pinnacle Foods is actively watching for potential M&A targets, particularly within the frozen food sector, and would consider cash transactions up to the $2 billion range.
Morgan Stanley has an Equal Weight rating on Pinnacle Foods.
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