PETALING JAYA: Analysts generally expect Nestle (M) Bhd
’s earnings growth to sustain in the fourth quarter of financial year 2026 (4Q26), supported by resilient demand for daily essentials, improving year-end festive demand and continued volume recovery, despite cautious consumer sentiment.
Better cost efficiencies and operating leverage should also cushion higher input costs and support continued year-on-year earnings growth.
For its latest 3Q26 results, Nestle Malaysia delivered a strong performance in line with healthy domestic demand, favourable commodity costs and foreign exchange, which drove a sharper-than-expected margin boost.
CIMB Research in a note to clients said it raised Nestle Malaysia’s financial year 2026 (FY26) and FY28 earnings per share forecasts by 8.1% to 17.2% to reflect a better margin outlook based on lower near-term input costs.
Accordingly, the research house raised the stock’s target price to RM118 from RM115 previously.
Given the 11% share price retracement over the past 12 months, CIMB Research views the valuation discount as “an attractive entry point given its improving earnings trajectory and resilient long-term fundamentals”.
It reiterated a “buy” call on the stock, backed by its entrenched brand portfolio in Malaysia, defensive staples-focused earnings profile and exposure to essential consumption.
MBSB Research, which is positive on Nestle Malaysia’s earnings outlook said domestic consumption will stay healthy, with management seeing no material change in consumer spending trends from earlier in the year.
However, growth is expected to moderate in 4Q26, although management remains confident of delivering a strong FY26.
The research house maintains a “buy” call on the stock with a revised target price of RM118.90 per share.
In a report, Hong Leong Investment Bank (HLIB) Research said while Nestle Malaysia’s management reaffirmed a very solid FY26, but it guided for a less spectacular 4Q26 as softer export pricing and base effects weigh on growth.
Going into FY27, management flagged a more challenging cost environment, particularly for dairy ingredients.
Critically, management signalled that price increases are likely in 2027 should current commodity trends be confirmed, albeit not on the scale of 2023 and 2024, and only after cost savings are exhausted given its mass-market consumer base.
HLIB Research, meanwhile, raised Nestle Malaysia’s FY26, FY27 and FY28 core profit after tax by 13%, 13.3% and 12.7% to RM696.1mil, RM737.3mil and RM778.6mil respectively.
“We stay prudent on 4Q26 given management’s guidance for a softer quarter, lower export prices against a high-cost 4Q25 base,” said the research house, which kept a “buy” on the stock at a lower target price of RM121.
Looking ahead, BIMB Research expects Nestle Malaysia’s growth will continue to be increasingly volume-driven, with no significant price increases expected in the near term.
While commodity costs have eased compared with FY25, the research house remains cautious heading into FY27 as cocoa prices remain elevated compared with historical levels, while energy-, freight- and packaging-related costs could remain volatile.
BIMB Research kept a “hold” call on the stock with an unchanged target price of RM93.20.
“While Nestle continues to deliver solid earnings growth through stronger execution and volume expansion, we believe much of the recovery is already reflected in current valuations,” it added.
Meanwhile, TA Research raised Nestle Malaysia’s FY26 earnings by 8.9%, reflecting a higher gross profit margin assumption of 32.7%, on the back of better cost control.
Nevertheless, it lowered FY27 and FY28 earnings by 3.5% each, reflecting a reduction in gross profit margin assumptions for both years amid renewed raw material price volatility.
Accordingly, the research house revised its target price to RM101 from RM128.80 previously.
“We downgrade Nestle Malaysia to a hold from a buy, as we believe the FY26 earnings recovery has been largely priced in, while rising input costs could constrain FY27 earnings,” the research house noted.
