The Bull Case For Nestlé (SWX:NESN) Could Change Following Blue Bottle Review And Chocolate Recipe Shift

• Nestlé has reportedly hired Morgan Stanley to review options for its Blue Bottle Coffee chain, including a potential sale of the business it first backed in 2017 for about US$700 million, while also facing consumer scrutiny after recipe changes mean Toffee Crisp and Blue Riband can no longer be labeled as chocolate.
• The Blue Bottle review underscores new CEO Philipp Navratil’s push to reshape Nestlé’s portfolio quickly, just months after announcing 16,000 job cuts and a renewed focus on only keeping businesses that meet strict growth and returns criteria.
• We’ll now explore how Nestlé’s Blue Bottle review and reformulated chocolate treats could influence the company’s longer-term investment narrative.

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Nestlé Investment Narrative Recap

To own Nestlé, you largely need to believe in its ability to compound earnings and dividends from a broad, global portfolio while keeping margins resilient. The Blue Bottle review and recipe changes look more like portfolio and brand housekeeping than events that materially shift the near term focus on restoring profit growth and shoring up cash generation, although any hit to brand perception or execution slip on disposals would add to existing margin and demand risks.

Among recent announcements, the planned reduction of 16,000 roles is most relevant here, because it sits alongside the Blue Bottle review as part of a wider effort to trim underperforming assets, lower costs, and support the efficiency and margin improvement initiatives that many investors see as central to Nestlé’s current catalyst story.

Yet investors should also be aware that, if commodity cost pressures persist while Nestlé is reshaping its portfolio and recipes, then...

Read the full narrative on Nestlé (it's free!)

Nestlé’s narrative projects CHF96.0 billion revenue and CHF12.0 billion earnings by 2028.

Uncover how Nestlé's forecasts yield a CHF88.05 fair value, a 13% upside to its current price.

Exploring Other Perspectives

Sixteen members of the Simply Wall St Community currently see Nestlé’s fair value anywhere between CHF 65.45 and CHF 142.81, underlining how far opinions can stretch. Set those views against the execution risk around ongoing cost cuts and portfolio reshaping, and it becomes even more important to weigh multiple perspectives before forming a conviction.

Explore 16 other fair value estimates on Nestlé - why the stock might be worth 16% less than the current price!

Build Your Own Nestlé Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Nestlé research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Nestlé research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Nestlé's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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