Mondelez International (MDLZ) is being viewed as a "top pick" as declining cocoa prices are expected to drive a significant earnings and margin recovery beginning in H2 of 2026 and accelerating into 2027, Morgan Stanley said in a report Monday.

The investment bank said recent stock underperformance tied partly to "geopolitical" concerns and pricing pressures has created a "buying opportunity," with continued cocoa price deflation expected to support a "significant margin inflection," according to the report.

Cocoa prices have fallen about 75% from their peak and roughly 20% since Mondelez reported Q4 2025, results, improving "visibility" into stronger margins and above-consensus earnings growth in 2027, the report said.

The investment bank raised its 2027 "base and bull case" estimates and reiterated an overweight rating on Mondelez, while raising its price target to $70 from $66.

Price: 56.62, Change: +1.73, Percent Change: +3.15