BNP Paribas Exane Downgrades Nestlé to ‘Neutral’, Citing Weaker Growth Prospects
Nestlé has received a credit-rating downgrade from BNP Paribas Exane, moving the Swiss food and beverage giant from “Outperform” to “Neutral” due to concerns around slowing growth momentum and limited near-term catalysts to drive performance.
The investment group said that while Nestlé remains a market leader and a high-quality operator, its current valuation no longer justifies an “Outperform” recommendation. The downgrade comes amid expectations of decelerating revenue growth and margin pressures across key segments, particularly in categories with high elasticity like confectionery and pet care.
BNP Paribas Exane analysts pointed to lackluster underlying sales dynamics, forecasting organic growth at the lower end of Nestlé’s medium-term target range. The company has recently struggled to maintain pricing power in certain markets, which could reduce profitability across key product lines.
“We view Nestlé’s growth outlook as modest over the next 12 to 18 months,” the note said, citing increased competition and shifts in consumer spending that are likely to impact premium and discretionary FMCG categories.
Analysts also highlighted internal challenges, including the ongoing portfolio reshaping that, while necessary, is not expected to deliver significant upside in the short term. Nestlé’s recent disposals and acquisitions will take time to translate into earnings upside, they added.
The report further noted that although Nestlé continues to focus on health, nutrition, and premiumization strategies, these are longer-term levers that may not materially lift earnings per share within the current fiscal cycle.
The market has reflected some of these concerns, with Nestlé shares underperforming other European staples recently. While its secure dividend and strong free cash flow remain attractive to defensive investors, BNP Paribas Exane sees limited scope for share price appreciation under current conditions.
The downgrade signals a cautious outlook for FMCG giants navigating subdued volume growth and cost inflation. With investor focus shifting toward companies offering clear near-term growth drivers, Nestlé’s performance will remain closely watched by market analysts and industry stakeholders.