Barclays cuts PT on Nestle; says CEO change a 'right choice'
** Barclays cuts its PT on Nestle NESN.S by 14% and estimates a modest margin reset due to higher investments, even though it says the surprise CEO change was a "right decision"
** "We think the change of CEO is an important line in the sand," the analysts say in a note, adding they still think Nestle has an "enviable" portfolio and stick to their "overweight" rating
** While they say going back to a seasoned insider such as Laurent Freixe as the new CEO is "the right choice", they note that the CEO change alone will not solve all of the problems
** Amid challenging consumer backdrop, Nestle needs to decide about the underperforming parts of its portfolio, especially frozen and water, they note
** "Ultimately Nestle needs to get back to the basics, which means flawless execution and much bigger and bolder innovation and more concentrated bets, particularly in fast growing white spaces" - Barclays
** It lowers PT to 95 Swiss francs from 110 francs and cuts its EPS estimates for 2025 and 2026 by 6% citing a modest margin reset and a more modest recovery in organic sales growth in 2025
** It adds it doesn't expect "revolution" at the November CMD, but the event "needs to be more than just evolution as the tough consumer backdrop demands a stronger response"
Reporting by Anna Pruchnicka
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