DBS analyst Zheng Feng Chee downgraded the rating on Pernod Ricard (0HAT – Research Report) to a Hold yesterday, setting a price target of €86.00.
Zheng Feng Chee has given his Hold rating due to a combination of factors impacting Pernod Ricard’s current and future performance. The company’s third-quarter revenue was in line with expectations, but it experienced a decline in organic growth, attributed to a high base effect, a later Easter, and challenging market conditions. Despite these challenges, there is optimism for a stronger fourth quarter driven by growth in India and a favorable comparison base.
However, the outlook remains cautious due to ongoing tariff impacts in key markets like China and the US, which are expected to result in a slight decline in organic net sales and operating margins. While Pernod Ricard is taking strategic actions to navigate these headwinds, such as cost optimizations and brand diversification, these efforts are anticipated to take time to yield results. Consequently, with limited visibility on immediate growth catalysts and potential delays in earnings recovery, the stock is expected to remain range-bound, justifying the Hold rating.
In another report released on April 18, HSBC also maintained a Hold rating on the stock with a €95.00 price target.