JPM upgrades Nestle, sees sales and margins rising

By Reuters News20 hours ago Updated

** JPMorgan upgrades Swiss food and drinks group Nestle NESN.S to "overweight" from "neutral", as it expects sales growth and margins to bounce back

** It sees Nestle's real internal growth (RIG), or sales volumes growth, improving towards what it describes as "the crucial 2%+ level"

** Broker expects 4.2% like-for-like sales growth -- best since 2023 -- and EBIT margin above 17% already in FY 2027, helped by better demand, firm pricing and 3 billion Swiss francs ($3.6 billion) of savings by FY 2028

** JPM sees improvement led by a US turnaround and continued strength in emerging markets, helped by a weaker prior-year base in nutrition and pet care

** Broker says cash flow should rise to 10-11 billion Swiss francs as efficiency improves, supporting the balance sheet and dividends

** JPM says valuation looks attractive near 15-year lows, leaving scope for a re-rating as earnings growth improves

** Out of 22 analysts that cover Nestle, 10 rate the stock "buy", 10 rate "hold" and 2 rate the stock "sell" - LSEG data

($1 = 0.8264 Swiss francs)