RBC Tweaks Model for Nestlé After H1 Earnings; Sector Perform Rating Kept

12:44 AM EDT, 07/24/2026 (MT Newswires) -- RBC Capital Markets updated its model for Nestlé (NESN.SW), revising its earnings forecasts after the Swiss packaged food and drinks giant published its half-year results. "We heard some grumbling from investors that [real internal growth] seems stuck below 2% and valuation is high in a sector context. Both are true, but both were evident before today's results publication in our opinion. More pertinent, perhaps, was the fact that 1H margins benefitted from a one-off reduction in pension costs [30 basis points], but with everything that's been going on with Nestlé's cost base, we are not inclined to get overexcited," according to a Thursday note. Nestlé posted 3.6% organic growth in the first six months of 2026, up from 2.9% in the previous year. This performance was supported by an RIG of 1.5% and a 2.1% contribution from pricing, which were at 0.2% and 2.7%, respectively, in the first half of 2025. "Nestlé is doing a competent job [revitalizing] the business, in our opinion, but we don't see this as marking a major inflection point. We think 4% organic revenue growth, including 2% RIG, is a challenging aspiration and that should be reflected in the shares' valuation. Our adjusted present value derived price target remains at CHF84. EV/NOPAT of 21.0x our 2027 forecast is towards the top of our consumer staples coverage, albeit 18.1x excluding L'Oréal is more mid-table. Hence, we retain our Sector Perform rating," analysts wrote. Against this backdrop, RBC trimmed its full-year 2026 revenue and EPS projections, while raising its estimates for the two metrics in 2027 and 2028.