Cocoa Price Retreat Offers Breather for Mondelez, Morgan Stanley Sees Clearer Path to Earnings Growth

Mondelez International (NASDAQ:MDLZ), the global snacking behemoth behind brands like Oreo and Cadbury, has caught a favorable wind from easing commodity costs. In a recent note, analysts at Morgan Stanley raised their price objective on the stock to $65 from $64, maintaining an Overweight rating. The key driver: a welcome decline in cocoa prices, which is providing clearer visibility into the company's earnings per share (EPS) forecasts for the coming year.

"The cocoa market is finally showing signs of cooling after a punishing rally," the Morgan Stanley report noted. "This is incrementally constructive for Mondelez, allowing us greater confidence in their margin trajectory." The analysts cautioned, however, that near-term uncertainty around organic sales growth remains a factor to watch.

The relief on the cocoa front is significant for a company that had warned of "unprecedented cocoa cost inflation," projecting it could slash adjusted EPS by up to 15% in 2025. Despite this persistent headwind, Mondelez operates from a position of notable financial strength. The company has built a robust track record of returning capital to shareholders, having grown its dividend at an annual rate above 10% over the past five years and repurchasing over $13 billion of its own shares since 2018.

"Management has consistently navigated input cost volatility," said David Chen, a portfolio manager at Horizon Capital Advisors. "Their geographic diversification and portfolio of iconic brands act as a natural hedge. The dividend growth story remains very much intact, which is appealing in this market."

However, not all observers are convinced. "Let's not pop the champagne just yet," countered Sarah Jenkins, an independent market analyst known for her sharp commentary. "A slight dip in cocoa doesn't erase the structural cost pressures or the fact that consumer wallets are stretched. Calling this 'incremental' is an understatement—it's a minor reprieve in a much larger battle for profitability."

Michael Torres, a retail investor following the consumer staples sector, offered a more measured take: "For long-term holders, this is positive news. It reduces a major overhang. The key will be whether they can leverage this breathing room to accelerate brand investment and volume growth, not just protect margins."

Mondelez's vast portfolio spans biscuits, chocolate, gum, and candy, making it a bellwether for global snacking demand. As economic uncertainty persists, its established brand equity and global footprint are expected to provide underlying support, even as the company manages the balance between returning capital and investing for growth.