UBS downgrades Nestle stock amid persistent pricing pressures By Investing.com

On Friday, UBS adjusted its stance on Nestle SA (SIX::SW) (OTC: NSRGY (OTC:)), downgrading the company’s stock from Buy to Neutral. The firm also set a new price target of CHF95.00, a decrease from the previous CHF117.00. This change follows Nestle’s latest quarterly report, which marked the fifth consecutive time the company has missed its organic sales growth (OSG) targets.

The revision by UBS comes after Nestle reported that its four key growth drivers—Coffee, Petcare, Nutrition, and Nestle Health Science—only saw an approximate 3% increase. This figure contrasts with the 6.5% average growth rate these segments experienced over the past six years.

The analyst noted no clear indicators of an imminent acceleration in growth, especially in the Nestle Health Science division, despite a favorable comparison base from previous years.

Additionally, Nestle has been facing significant pricing pressures amid a backdrop of weak consumer sentiment. This has led the company to increase promotional efforts and invest in price competitiveness, particularly noticeable in the U.S. frozen food sector and China market.

The report also highlighted that while there has been a slight improvement, market share growth remains subdued. Only 56% of Nestle’s “billionaire brands,” which account for 70% of its sales, are holding or gaining market share. This suggests that the company’s leading products are struggling to outperform in a competitive market environment.

UBS’ downgraded rating and reduced price target reflect the challenges Nestle faces to return to its historical OSG model of 4-6%. The firm’s analysis indicates that the combination of modest growth in critical segments, increased competition, and the need for more aggressive pricing strategies could impact Nestle’s performance in the near term.

In other recent news, Universal Health (NYSE:) Services has seen several changes in its stock ratings and price targets by various analyst firms. Cantor Fitzgerald upgraded the company’s stock from Underweight to Neutral and raised its price target to $219.00, citing an optimistic outlook for the company’s acute care segment.

Similarly, Baird upgraded the company’s shares from Neutral to Outperform, raising its price target to $236.00, based on the company’s potential for significant earnings growth.

UBS also upgraded Universal Health Services ‘ stock from Neutral to Buy, raising the price target to $226.00. This upgrade reflects a positive outlook on the company’s earnings potential, particularly in its behavioral health services. In addition, RBC Capital and TD Cowen adjusted their price targets for Universal Health Services in response to the company’s strong performance in the first quarter of 2024.

On the financial front, Universal Health Services declared a cash dividend of $0.20 per share, scheduled for disbursement in June. This dividend announcement is a demonstration of the company’s ongoing commitment to delivering value to its shareholders.

These are among the recent developments surrounding Universal Health Services, providing investors with updated perspectives on the company’s financial performance and growth potential.

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