Nestlé shares declined 1.4% to 78.73 Swiss francs in early trading on Thursday, underperforming the broader Swiss Market Index, which fell 0.9%. The move follows a downgrade from Zürcher Kantonalbank (ZKB), which lowered its rating on the food giant from "Overweight" to "Market Weight" and slashed its price target from 104 to 91 francs.
ZKB analyst Gian Marco Werro acknowledged Nestlé’s strategic direction but cautioned that the company’s transformation process would take time to yield results. The multi-year adjustment period involves rebuilding brand strength and improving profitability, which requires sustained effort, Werro noted. The downgrade and target cut were primarily driven by reduced earnings before interest and taxes (EBIT) forecasts for 2027 and 2028, which were trimmed by approximately 5.4%. Higher restructuring costs, alongside elevated marketing and distribution expenses, were cited as key contributors to the downward revision.
Nestlé’s shares have now pared gains from their year-to-date peak of 87 francs, reached on July 29, to a 1.4% increase since January. The broader market context remains mixed, with the SMI reflecting cautious investor sentiment.
A slightly less bearish view was offered by Julius Bär, which trimmed its price target for Nestlé from 95 to 94 francs on July 28 while maintaining a "Buy" recommendation. The adjustment followed the release of Nestlé’s half-year results, which exceeded expectations with stronger-than-anticipated sales and confirmed guidance for organic growth. Analyst Peter Casanova of Julius Bär expects continued improvement in volume and margin performance, though he warned that rising costs for key commodities such as coffee and cocoa could temper progress.
According to AWP data, Nestlé’s stock is currently rated "Buy" by 11 analysts, "Hold" by nine, and "Sell" by one, with the average price target standing at 88 francs.
