Editor's Note: This analysis was originally published as a stock note by Morningstar Equity Research.
Key Morningstar Metrics for Nestlé
- Fair Value Estimate: CHF 92
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: Low
Nestlé Confirms Full-Year Guidance
Nestlé reported first-quarter 2025 organic sales growth of 2.8%, ahead of 2.5% company-compiled consensus, driven by pricing. The company confirmed full-year 2025 guidance. The share price was slightly down in early trading on April 24.
Why it matters: Despite the consensus beat, real internal growth (volume and mix) was slightly disappointing at 0.7%, falling below the 0.8% consensus, and a deceleration compared with the fourth quarter of 2024. Reaccelerating volume growth remains a key priority to enhance the quality of results.
- Pricing strength came primarily from efforts to offset input cost inflation in coffee and confectionery. Coffee saw mid-single-digit pricing, while confectionery posted double-digit increases, with limited customer disruption. Real internal growth was slightly negative in confectionery, but it’s still too early to see the full impact of the increases on price elasticities.
- Growth categories such as health science, pet care, and Nespresso outperformed the group average in real internal growth, posting performance in the 2.5%–4.8% range.
The bottom line: We confirm our CHF 92 fair value estimate for wide-moat Nestlé. At current levels, we see a modest upside of roughly 5%. The first-quarter delivery is broadly aligned with our full-year forecast, with our 3.3% organic sales growth forecast primarily driven by pricing of 2.4%.
- The share price has rebounded around 17% year to date, helped by a fourth-quarter 2024 consensus beat and limited direct tariff exposure, given Nestlé’s focus on local-for-local manufacturing.
- Nonetheless, Nestlé is not immune to second-order tariff effects, including pressure on currencies, commodities, and consumer sentiment. These may affect growth in more discretionary categories such as vitamins, minerals, and supplements.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.