Mondelez International Inc (NASDAQ:MDLZ) managed a slight recovery after quite a few sessions of loss, amounting to nearly 8-9%. The rise of the dollar in the recent times has not been good for the company as 80% of its revenue comes from overseas countries. The weakness of the currencies of those countries against the Dollar directly affects the bottom line of the company and does that in a major way.
Mondelez International Inc (NASDAQ:MDLZ) had reported a revenue of $8.83 billion against the expected figure of $9.08 billion, but the adjusted earnings per share of $0.47 was higher than the expected $0.43. The result day February 11th was positive in general but it also registered the short term top and after a small consolidation phase, the stock broke down.
Dollar Index continues to rally and has already gained about 10% in this calendar year. As long as that rally continues, Mondelez International Inc (NASDAQ:MDLZ) will find it difficult to improve the result due to currency conversion. With that in mind, perhaps, the analysts of various houses are veering towards the “sell” rating, like Zacks. Other houses like Deutsche Bank maintains “hold” rating with a price target of $36.
The technical picture for the company is mixed as the price has just hit a major channel support as evident from the chart attached. All the price action since 2012 is nicely contained in a major long term channel and that may provide adequate support. This bullish speculation gathers some strength from the daily candles forming a bullish pattern called “Morning Star” but needs further confirmation in the form of a closing above this week’s high.
In case the Dollar rally affects the stock price and breaks the long term channel on the downside, then the price can test the major support area around $32.