The maker of Oreo cookies is a buy and can jump nearly 20%, Wells Fargo says

Wells Fargo upgraded Mondelez International to overweight with a price target of $78, citing strong execution and potential for superior long-term growth driven by market share gains and strategic M&A. Analyst Chris Carey highlighted the company's effective pricing strategies in the face of inflation, particularly in the European chocolate segment, which is expected to offset softness in the North American market and position the company favorably for 2026 as inflation tempers, making Mondelez attractive compared to other large-cap staples.

Analysis

Wells Fargo has upgraded Mondelez International (MDLZ) to an overweight rating, setting a new price target of $78, an increase from $68, which implies a potential upside of nearly 18%. This upgrade is underpinned by Wells Fargo's view of MDLZ as a top-tier execution story within the Staples sector, with prospects for superior long-term growth driven by market share gains in developed markets, expansion into untapped developing markets, and a proactive M&A strategy. The company's effective pricing execution, particularly in its European chocolate segment, is highlighted as a key factor in navigating significant cocoa-related inflation anticipated for 2025, with European demand elasticities performing better than expected and helping to anchor 2025 estimates. While some softness persists in the North American market, this is a sector-wide issue, and Mondelez's European strength is seen as a crucial offset. Furthermore, inflation is projected to ease considerably in 2026, creating a pathway for earnings recovery and enhancing MDLZ's appeal compared to large-cap Staples peers struggling for growth, especially considering MDLZ shares have already advanced 11% year-to-date.

Key Decisions for Investors

• Investors may consider the upgraded overweight rating and $78 price target from Wells Fargo as a positive signal for Mondelez, reflecting its strong execution and growth prospects relative to Staples peers.
• Monitor the company's ability to successfully implement pricing strategies to counteract 2025's inflationary pressures, particularly cocoa costs, and observe consumer demand elasticity in key markets like Europe, while also tracking any improvement in the North American segment.
• Evaluate Mondelez's ongoing M&A activities and market share initiatives as critical components of its long-term growth narrative, especially with an anticipated easing of inflation in 2026 which could further bolster earnings.