Nestlé (NESN.SW): Heading in a better direction

Nestlé reported its 3Q26 trading statement with a positive set of numbers, marking another step in the right direction. 3Q26 RIG growth of 2.8% came in nearly double consensus of 1.5%, a sequential acceleration of around 100bps and the strongest quarterly performance since 2021; all regions saw a sequential pickup in RIG. At divisional level performance was more mixed: Petcare, Food/Snacks and Waters were especially strong and materially outperformed expectations, with Pet seemingly back to being the growth driver it had consistently been pre-pandemic, which management attributes to structural recovery. However, both coffee and nutrition disappointed with sequential deceleration, Russia headwinds were larger than expected, and the 2027 cost/margin outlook is starting to look troublesome, with RIG improvement likely to hit a bump as pricing re-accelerates. We continue to rate Nestlé Market-Perform and revise our TP to CHF 77.00 (from CHF 74.00) using an EV/EBITDA multiple of 11.0x again