Mondelez International (NASDAQ:MDLZ) confirms that it is making "selective" price increases in the U.K.
The company wasn't specific with which products will see a price boost, although it cited the escalating cost of cocoa since 2013 (see chart). The weak level of the British pound is also a major factor for Mondelez and other multinationals selling in the U.K.
Kraft Heinz (NASDAQ:KHC) has enough financial muscle to fund a new $90B deal, according Susquehanna.
Analyst Pablo Zuanic reiterates that Mondelez International (NASDAQ:MDLZ) is the most logical target for KHC. Mondelez trades with a market cap just under $69B.
Asset divestitures could bring down the amount of money that Warren Buffett and 3G would have to kick in to retain a controlling stake in KHC, while debt and equity issuance would fund the balance.
Susquehanna PT math: "Our price target is now $115. A hypothetical bid for, say, MDLZ (28% accretive as per our math, with a $90B deal funded half equity and half cash) would add about $28 to our just-on-fundamentals valuation of $100, bringing the stock to $128. Our published price target of $115 takes half of the accretion from this hypothetical deal (i.e., assigning 50% probability)."
Goldman Sach breaks down the impact of a "destination-based" tax on consumer staples companies.
The GS team forecasts a 9% EPS benefit from Trump/GOP tax policies (25% corporate rate, repeal of interest expense deduction, repatriation tax at 8.75% with proceeds going to buybacks) and a 6% EPS gain if the destination-based tax proposal is part of the final plan.
Constellation Brands (NYSE:STZ), Hershey (NYSE:HSY) and Mondelez International (NASDAQ:MDLZ) are seen as three companies within the staples sector that would be impacted the most on the negative side from the destination tax.
On a broad look at tax implications, GS sees benefits for Dean Foods (NYSE:DF), Monster Beverage (NASDAQ:MNST), Reynolds American (NYSE:RAI) and Energizer Holdings (NYSE:ENR).
Mondelez International (NASDAQ:MDLZ) says it hasn't head from Kraft Heinz (NASDAQ:KHC) about a potential buyout, according to Reuters. In addition, Mondelez advises that it has no reason to believe the report posted earlier from a Swiss magazine on a deal is true.
Deutsche Bank warns that the party is over for consumer staples stocks.
The investment firm smacked Dow 30 stocks Procter & Gamble and Coca-Cola with downgrades to Hold on broad macro factors (F/X,USD, stronger economy = flight out of safety) that could apply to a host of multinational consumer staples sellers (KMB, MDLZ, PEP, PMCL, CLX).
A fresh dive by Susquehanna analyst Pablo Zuanic into K-Cup trends indicates that Kraft-Heinz (NASDAQ:KHC) is firing off the most aggressive pricing of sellers in the category.
K-cup prices are down 8% on average for Kraft brands, while they are being trimmed 5% for Keurig-owned brands and 4% for J.M. Smucker. Starbucks, which talked about a "slowdown" in the K-cup market during its Analyst Day event yesterday, has lowered K-cup prices by 2% on average.
The K-cup deceleration puts pressure on JAB Holding Company which acquired Keurig Green Mountain earlier this year for $13.9B.
"A no growth market and continued decline in market share cannot be what JAB had expected when they paid $92 per GMCR shares," writes Zuanic. He throws out an interesting scenario in which Kraft Heinz buys Mondelez International (NASDAQ:MDLZ) and funds the deal through the sale of its packaged coffee business to JAB.
The company reported Q3 revenue of $196.2M, operating income of $55.7M, and net income of $33.5M. The only Street coverage at the moment is from SunTrust, and the team there was looking for $180.2M, $49.8M, and $16.4M, respectively.
Seeking Alpha contributor and Hostess (NASDAQ:TWNK) bull Dane Capital Management notes the stock trades at several EBITDA multiple turns lower than slower growth and lower margin peers like Hershey (NYSE:HSY) and Mondelez (NASDAQ:MDLZ).