Nestlé has concluded a significant portfolio move just before the year’s end, severing its final ties to processed meat subsidiary Herta. This definitive exit marks a clear step in the strategic overhaul being pursued by new Chief Executive Philipp Navratil. However, with the company facing revenue declines and significant currency headwinds, questions remain over whether this streamlining is sufficient to bolster investor confidence.
- Strategic Divestment: The sale of Nestlé’s remaining 40% stake in Herta has been finalized.
- Financial Performance: First-half sales fell to CHF 44.2 billion, a decline of 1.8%.
- Analyst Outlook: Citi has reduced its price target on Nestlé shares to CHF 85.
- Market Performance: The stock has declined by 2.84% over the past month.
A Clear Signal of Strategic Refocus
Nestlé has officially closed the book on its involvement with Herta, transferring its remaining 40% holding to Spanish partner Casa Tarradellas. Reported as completed on December 23, 2025, this transaction dissolves the joint venture established in 2019. For the global food and beverage giant, this move represents more than a simple asset sale. It is a deliberate signal of intent to reallocate resources toward higher-margin growth segments, including coffee, pet care, and health science. CEO Navratil is thus putting an early stamp on his tenure by prioritizing portfolio optimization.
Currency Woes and Cautious Analyst Sentiment
The positive news of the completed divestment is tempered by operational challenges. Nestlé’s first-half results were heavily impacted by a strong Swiss franc, which created a 4.7% currency drag. This pressure contributed to the drop in total sales to CHF 44.2 billion. While the company posted organic growth of 2.9%, this figure was almost entirely driven by price increases. The Real Internal Growth (RIG) metric, which indicates volume sold, remained barely positive at just 0.2%.
Should investors sell immediately? Or is it worth buying Nestle?
This mixed picture is reflected in recent analysis from Citi. In a December 16 research note, the bank’s strategists lowered their price target from CHF 90 to CHF 85, maintaining a “Neutral” rating. Their skepticism centers on the timeline for a meaningful recovery in profit margins. With the share price closing at 83.62 euros in recent trading, the equity is trading near this revised target, suggesting limited near-term upside potential in the view of these market experts.
2026 Emerges as a Pivotal Transition Year
The path forward is now set. Under Navratil’s leadership, Nestlé is emphasizing growth initiatives over pure cost-cutting. The “Fuel for Growth” program is designed to generate funds that will be centrally reinvested into innovation and high-return markets, rather than being booked directly as profit. Consequently, for investors, 2026 is shaping up as a critical transition year. The key driver for the share price will be management’s ability to use these investments to reignite substantial volume growth, all while navigating the profitability pressures from elevated raw material costs in key categories like coffee and cocoa.
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