Feline Better, Upgrade to Buy

Research evidence excerpt

Feline Better, Upgrade to Buy

Switzerland | Food & HPC

Nestle EquityJulyResearch22, 2026

RATING | TARGET | ESTIMATE CHANGEFeline Better, Upgrade to Buy

Recent struggles date back to decisions in 2022. Vol/mix was zealously RATING BUY (HOLD)

supported in FY22/23, to give credibility to claims that LFL sales in 2020/21 PRICE CHF85.55^

were not boosted by COVID. That led to pricing under-recovery, offset PRICE TARGET | % TO PT CHF99.00 (CHF84.00) |

by dramatic cuts in brand investment. That created unique challenges +16%

52W HIGH-LOW CHF85.87 - CHF69.90

for 2023/25. These are fading, alongside an improving environment for

FLOAT (%) | ADV MM (USD) 98.1% | 394.25

categories like Pet & Coffee. Upgrade to Buy, with an expected re-rate

MARKET CAP CHF220.4B | $271.9B

towards 20x NTM P/E, vs 18.4x today.

TICKER NESN SW

^Prior trading day's closing price unless otherwise

Recovering past mistakes. We think resource allocation decisions from 2022 became too noted.

focused on unsustainable vol/mix growth levels. NESN was reluctant to concede that group

vol/mix growth of 4.5% pa in 2020/21 had been inflated by COVID benefits. Instead, it

maintained that 2020/21 reflected a structurally stronger company. As 2023/24 suffered FY (Dec) CHANGE TO JEFe JEF vs CONS

in the context of transitory prior demand, optimal investment plans for the long-term were 2026 2027 2026 2027

abandoned. The resulting short term allocation decision has weighed on performance in REV NM <1% +1% +1%

2024/25, we think. Recovery from such past decisions takes time. Competitiveness is not EPS +1% +2% +3% +3%

restored immediately; channel overloading needs to unwind & trust must be rebuilt. A mindset

shift away from over-zealous short-term pressures also has to reset. But, we now see the