PERNOD RICARD : Oddo BHF downgrades its recommendation
April 05, 2024 at 04:52 am EDT
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Oddo BHF has downgraded its recommendation on Pernod Ricard from 'outperform' to 'neutral', with a price target reduced from €190 to €150, and now expects EPS for fiscal 2023-24 to fall by 14.3% (instead of 11.1%).
The catalysts we expected to support Pernod Ricard's share price performance, namely the recovery in the Group's key markets such as China and the United States, are not materializing", notes the analyst.
Oddo BHF believes that the timeframe for the Group's growth recovery is regularly being pushed back, and that uncertainties over its timing should weigh on the stock's performance, and has therefore raised its beta to one, from 0.9 previously.
The research department does not see much downside potential for the stock, however, due to Pernod Ricard's recent underperformance relative to the spirits sector and a very low valuation level reflecting the current low visibility.
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Pernod Ricard is the world's No. 2 in the production and marketing of Premium and Prestige spirits and wines. Net sales break down by family of products as follows:
- spirits and champagnes of strategic international brands (63.4%): Absolut (12.7 million cases sold in 2022/23), Jameson (10.7 million), Ballantine's (8.8 million), Chivas Regal (5.1 million), Malibu (4.7 million), Ricard (4.4 million), Havana Club (4.3 million), Beefeater (3.7 million), Martell (2.4 million), The Glenlivet (1.6 million), Mumm (0.6 million), Royal Salute (0.3 million) and Perrier-Jouët (0.3 million);
- local strategic brands' spirits (17.7%): Seagram's, Kahlua, Olmeca, Seagram's Gin, Ramazzotti, Imperial, Pastis 51 and Clan Campbell brands, etc.;
- speciality brand's craft spirits (6.2%): Italicus, Lillet, Pernod, Suze, Augier, Malfy, Jefferson's, Powers and Redbreast brands, etc.;
- strategic wines (3.9%): Jacob's Creek, Kenwood, Brancott Estate, Campo Viejo, Church Road, George, St Hugo, Stoneleigh, Ysios and Wyndham brands;
- other (8.8%).
At the end of June 2023, the group has 96 production sites worldwide.
Net sales are distributed geographically as follows: Europe (28.5%), Americas (28.7%) and other (42.8%).