Thursday, 18 April 2024

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HSBC cuts Pernod Ricard stock target on US recovery woes By

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On Thursday, HSBC adjusted its financial outlook for Pernod Ricard (EPA:) SA (RI:FP) (OTC: PDRDY), reducing the stock’s price target from EUR140.00 to EUR138.00. Despite the change in the price target, the firm has maintained its Reduce rating on the shares of the French spirits company.

The adjustment by HSBC comes in response to a slower than expected recovery in the United States market. The firm has revised its forecast for the company’s FY24 Americas organic sales growth down to -6.0%. This revision is based on the continuation of inventory adjustments in the US during the third quarter. Additionally, data from the National Alcohol Beverage Control Association (NABCA) for January and February indicated a worsening trend in US sell-out figures.

As a result of these factors, HSBC has also lowered its projection for Pernod Ricard’s overall FY organic sales growth from -0.4% to -0.8%. The firm’s discounted cash flow (DCF) target price has been affected by these revisions, leading to the new target of EUR138.00. This new price target suggests a potential downside of approximately 7% from the current trading levels.

HSBC’s outlook for Pernod Ricard is cautious, with an expectation that there may be further pressure on consensus estimates in the months ahead. This anticipated pressure could likely lead to a weakening in the share price. Currently, Pernod Ricard’s shares are trading at a price-to-earnings (PE) ratio of 18.2 times.

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