Is Nestlé on the verge of a comeback?

Morgan Stanley (MS, Financial) just flipped the script on Nestle (NSRGY, Financial), raising its rating from Underweight to Equal Weight after months of underperformance. The company’s target price is now 76 CHF ($85 for NSRGY), which has softened from previous forecasts but reflects a new reality. Nestlé’s valuation – currently at 16.9 times forecast 2025 earnings – has come back down to earth and is in line with its peers from European consumer staples. Morgan Stanley analysts acknowledged that risks such as slower organic sales growth (OSG) and profit margin pressure have not magically disappeared, but the market appears to have addressed those concerns. Translation? Nestlé shares could finally be more stable.

Here’s the deal: Nestlé management has drawn up a recovery guide. Consider increased investment in marketing and innovation as well as a greater focus on portfolio adjustments. They’re aiming for organic growth of over 4% and a profit margin of over 17% – but don’t hold your breath. Morgan Stanley expects it will take 18 to 24 months to achieve these goals. While some skeptics may point to potential risks in 2025 and 2026, analysts are giving credit where it’s due. Nestlé’s recalibrated strategy may not scream “explosive growth,” but it does suggest that the company is positioning itself for stability and durability over the medium term.

What is the bottom line for investors? Nestlé is no longer the growth-at-all-costs juggernaut it once was, but its efforts to steady the ship appear to be working. With a fair valuation, a strong brand portfolio and some wiggle room in expectations, the Swiss food giant is shaping up to be a solid, if not spectacular, long-term bet. Keep an eye on execution – marketing reinvestment and innovation will be the true test of whether this upgrade was a flash in the pan or the start of a true comeback story.