Pernod Ricard: supported by a recommendation upgrade
March 21, 2024 at 04:32 am EDT
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Pernod Ricard shares rose sharply on the Paris Bourse on Thursday, buoyed by a note from Deutsche Bank, which raised its recommendation on the stock a month ahead of the publication of quarterly sales.
At around 9.15 a.m., the share price was up 1.3%, one of the biggest gains on a CAC 40 index up by around 0.5%.
In a note, Deutsche Bank said it had upgraded its rating on the spirits group from 'sell' to 'hold', and raised its target price from €135 to €140.
The broker points out that the stock has largely underperformed since it was downgraded to 'sell' at the beginning of 2023, falling 24% over the period, 21% behind the STOXX Europe 600 Food & Beverage and 47% behind the STOXX Europe 600.
We consider that the stock is now well valued and that its risk/return profile is now correctly balanced", explains the research department.
Deutsche warns, however, that the group remains exposed to the normalization of the US spirits market, to market share losses in the US, as well as to economic uncertainty and regulatory developments in China.
Pernod Ricard is due to publish sales for its 3rd fiscal quarter on April 25 ahead of trading.
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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%).