Nestle SA (NSRGY)(GB:0QR4) has impressed investors with its financial performance so far in 2022. Its ability to increase prices to counter inflationary headwinds and strong demand has helped it to navigate the current challenges well. However, the prolonged high inflation and its impact on consumer spending could pose challenges for the company.
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It recently posted strong financial numbers for the nine months ended September 2022, wherein its sales increased by 9.2%, led by pricing, broad-based growth across most geographies and categories, and benefits from the acquisition.
It’s worth highlighting that Nestle’s organic sales increased by 8.5%, reflecting a 7.5% growth in pricing. However, real internal growth was 1%, reflecting tough year-over-year comparisons and supply constraints.
Nestle’s CEO, Mark Schneider, is confident about the company’s future growth prospects. He expects brand strength, operational execution, and solid underlying category dynamics to support growth. The company expects organic sales to be 8% in 2022. Meanwhile, the underlying trading operating profit margin is projected to be close to 17.0%.
While Nestle’s sales outlook remains strong, the challenging economic environment impacting consumer spending, currency headwinds, and uncertainty could hurt its growth. A continued increase in prices could also hurt demand.
Is Nestle a Buy, Sell, or Hold?
Wall Street analysts are cautiously optimistic about Nestle stock. It has received 10 Buy, five Hold, and one Sell recommendations for a Moderate Buy consensus rating. Further, analysts’ average price target of SFr.124.06 implies 15% upside potential.
While analysts are cautiously optimistic about Nestle stock, it has a negative signal from insiders. TipRanks’ data shows insiders sold $2.1M worth of Nestle stock last quarter. However, blogger sentiments remain positive.
