Nestlé share price in free fall: What's behind the food giant's decline?

Nestlé share price in free fall: What's behind the food giant's decline?

According to a report by www.faz.net,

What's wrong with Nestlé? Many shareholders of the world's largest food company are currently asking themselves this question when they look at the price of their shares. This has fallen by 7 percent since the beginning of the year and has recently fallen below the psychologically important mark of 100 francs. The Swiss giant has a reputation for being a safe bank, especially in uncertain times. After all, there is always food.

According to the Danish pharmaceutical company Novo Nordisk, the active ingredient semaglutide, which is used in the weight loss injections, lowers body weight by reducing the overall appetite and reducing the preference for high-fat foods. This development has caused investors to steer clear of related food stocks. However, Jean-Philippe Bertschy, an analyst at Bank Vontobel, emphasizes that the price setbacks are exaggerated and are likely to reduce sales in the food industry by at most 1 to 2 percent.

Nestlé is not only suffering from the hype about weight loss injections, but also from home-grown delivery problems in the promising health sector. In addition, the stock is currently lagging behind the return of low-risk government bonds, which is undermining Nestlé's reputation as a bond replacement. Nevertheless, analyst Bertschy sees considerable upside potential for Nestlé shares and has set a price target of 130 francs.

The falling prices of Nestlé shares are also slowing down developments in the Swiss Market Index (SMI). The food company has a high weight in this leading index, which includes 20 stocks, thanks to its high stock market value. Together with Roche, whose participation certificates have also fallen due to product discontinuations and the influence of the strong franc, Nestlé has contributed to the SMI falling by almost 2 percent since the beginning of the year.

The biggest winner on the Swiss stock market this year is UBS. The share price increase of almost 29 percent shows that investors see significantly more opportunities than risks in the takeover of Credit Suisse.

The numbers and developments suggest that the Swiss financial industry is influenced by a variety of factors, from the popularity of weight loss injections to exchange rates and mergers. Uncertainty in the financial industry could continue over the next few quarters as companies try to adapt to the new conditions.