Nestlé: Oddo BHF confirms buy rating

(CercleFinance.com) - Oddo BHF has confirmed its buy rating on the Nestlé share after the giant Swiss agri-food giant's disposal of its American confectionery business.


The broker has confirmed its target price of 92 Swiss francs, meaning upside potential of 11%.

Nestlé will sell this business, which includes the Crunch and Chunky brands - although not Toll House - to the Italian group Ferrero for 2.8 billion dollars in cash. It represents annual revenues of approximately 900 million dollars. The transaction is set to be finalised in the first quarter, subject to the usual conditions.

Although the transaction was already expected, Oddo BHF hails the price that has been obtained: 3.1x sales and 22.7x operating profit for this business, which has only 6% of the American confectionery market, and whose profitability" is falling. Furthermore, market rumours only considered a price of between 2 billion dollars and 2.5 billion dollars.


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