Nestlé Shares Under Pressure Amid Major Infant Formula Recall

Nestlé is grappling with the significant fallout from a global recall of its infant formula products, a crisis that has placed immediate pressure on its stock price and presents a stern early test for its new chief executive. The company confirmed the worldwide action, which spans more than 60 countries and involves brands including NAN, SMA, BEBA, and Alfamino.

The product safety issue could not have come at a more challenging time for CEO Philipp Navratil, who only assumed leadership of the conglomerate in September 2025. He publicly apologized for the situation on Tuesday. Navratil had been focused on a portfolio review and reigniting growth following a period of management transition. Since the recall was announced on January 5th, Nestlé's share price has seen pronounced declines.

Source and Scale of the Contamination

The root cause has been traced to a contamination with cereulide, originating from a supplier of ARA oil, an ingredient used in various infant nutrition items. All recall procedures have now been initiated, according to the company's statement. Notably, no confirmed cases of illness have been linked to the affected products to date.

The financial weight of this segment is substantial for Nestlé. Specialized nutrition, which includes infant formula, accounts for 21% of the group's net sales. When combined with the PetCare division, the total rises to 37% of net revenue.

Should investors sell immediately? Or is it worth buying Nestle?

Timeline and Communication Criticized

Internal quality control at a Dutch manufacturing facility first identified the problem in December 2025. This timeline has drawn sharp criticism from consumer advocacy groups. FoodWatch International has accused Nestlé of informing European authorities in December while delaying the public recall announcement until early January.

"It is unacceptable that information is only being passed to us in a piecemeal fashion," stated Nicole van Gemert, FoodWatch's director.

Divergent Views from Market Analysts

Financial analysts are offering mixed perspectives on the long-term impact:

• Jefferies has maintained a "Hold" rating on the stock, characterizing 2026 as potentially a "dramatic, yet ultimately constructive reset year" for the company. The firm revised its forecast for Nestlé's organic sales growth down from 3.5% to 2.8%, but anticipates improvement in volume mix.
• In contrast, Berenberg struck a more optimistic note, reaffirming its "Buy" recommendation in November. Its analysts project a margin recovery and 4% earnings per share (EPS) growth for 2026.
• Credit agency S&P Global Ratings had already adjusted its outlook on Nestlé to "Negative" in October, citing an expected increase in the group's leverage ratio to approximately 3.0x by the end of 2025.

All eyes are now on Nestlé's full-year 2025 results presentation scheduled for February 19th. Navratil is expected to outline his strategic vision and provide guidance for 2026. Market consensus estimates point to 2025 sales of around CHF 89.8 billion, representing a 1.7% decline from the previous year. Investors will be watching closely for concrete actions to restore market and consumer confidence.