On Thursday, Citi reinstated coverage on Koninklijke Ahold Delhaize NV (AD:NA) (OTC: ADRNY (OTC:ADRNY)) with a Neutral rating and set a price target of EUR 37.00. The move came as the firm updated its forecasts in anticipation of the fourth-quarter 2024 results and following the completion of the Profi Rom acquisition.
The research firm adjusted its fourth-quarter 2024 U.S. sales growth estimates to account for store closures and a slight impact from fuel prices. It now expects underlying comparable sales store (CSS) momentum to accelerate to +1.0% in Q4, aligning with the consensus.
In Europe, Citi slightly raised its Q4 CSS forecast to +1.9%, which is consistent with the consensus and assumes flat underlying momentum, including a roughly 300 basis point headwind from tobacco sales.
Citi’s analysts project a full-year 2024 group EBIT margin of 4.02%, a slight decrease from the previous 4.04% and below the consensus of 4.10%. For the fiscal year 2025, the firm increased its sales forecast by 6.3%, which includes a €3 billion sales contribution from Profi and is largely supported by a stronger U.S. dollar. The analysts expect Profi to have a neutral effect on earnings per share (EPS) in FY25 and to become EPS accretive from FY26 onwards.
The revised earnings per share estimates for FY24 and FY25 are -0.8% and +4.7%, respectively. The price target of EUR 37 is based on an 11.5x FY26 earnings per share multiple, which is in line with the three-year average.
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