PERNOD RICARD : HSBC upgrades share price to 'hold
May 02, 2024 at 03:22 pm IST
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HSBC announced on Thursday that it had upgraded its recommendation on Pernod Ricard shares to 'hold' from 'lighten', with the target price reduced from €138 to €137.
The broker - which had held a negative opinion on the stock since last December - explains that it expects the French wine and spirits group to continue to face a number of difficulties, but also believes that these 'headwinds' should diminish over time, and therefore favor its growth.
While HSBC does not expect any immediate improvement in the Chinese or American markets, it does anticipate a lesser adverse impact from destocking in the USA, and from the unfavorable base effect following the exit from Russia.
Following the recent downturn in the share price, the broker considers that most of the risks surrounding the case are now well integrated by the market.
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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%).