Nestlé’s 3Q Profit Surges 73%; TA Securities Downgrades as Rising Costs Threaten 2027 Margins
Octopaul AI ·
Nestlé (Malaysia) delivered better-than-expected 3Q26 results, with net profit rising 73.2% year-on-year to RM197.5 million. Lower input costs and operating efficiencies helped lift gross margin to 34.1% from 29.5% a year earlier. The group declared an 80-sen second interim dividend, bringing year-to-date dividends to RM1.60 per share.
TA Securities analyst Liew Yi Jiet downgraded Nestlé to “Hold” from “Buy” and cut his target price to RM101.00 from RM128.80, implying 4.3% upside. He believes the earnings recovery is largely priced in, while rising commodity costs could pressure margins over the next two quarters.
Liew expects Nestlé to absorb part of the higher raw-material costs, as immediate selling-price increases could compromise market share. This could constrain 2027 profitability despite the strong 2026 earnings recovery.
Meanwhile, CGS International analyst Prem Jearajasingam upgraded Nestlé to “Hold” from “Reduce”, raising his target price to RM97.20 from RM92.00, implying 0.4% upside. The earnings beat and the stock’s underperformance have brought valuations to fairer levels, in his view.
However, he expects recent margin gains from cheaper hedged inputs and a stronger ringgit to moderate as commodity prices recover and currency benefits fade. He views the stock as fairly valued at approximately 30.9 times projected 2027 earnings.
As of 9:13 a.m. on October 28, Nestlé (Malaysia)’s share price rose 2.7% to RM96.80.
Disclaimer: All content is AI-aggregated from public sources for informational and educational purposes only. StockTipRatings.com does not constitute investment advice. Past performance and historical statistics are no guarantee of future returns.