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On Wednesday, Berenberg initiated coverage on Carlsberg (CSE:CARLb) A/S (CARLB:DC) (OTC: CABGY (OTC:CABGY)) with a Hold rating and a price target of DKK1,033.00. The firm highlighted the importance of Carlsberg’s performance in China and the recent acquisition of Britvic (LON:BVIC) as pivotal factors in the company’s growth and value creation strategy. According to InvestingPro data, Carlsberg has demonstrated strong momentum with a 36.1% year-to-date return, while current analysis suggests the stock is trading below its Fair Value.
The Berenberg analyst pointed out that Carlsberg’s investment appeal has traditionally been tied to its success in the Chinese market. However, the recent acquisition of Britvic is seen as a strategic move to diversify the company’s growth drivers, especially given the current economic uncertainties in China. With annual revenue of $10.4 billion and a robust gross profit margin of 45.8%, Carlsberg maintains a strong market position as a prominent player in the beverages industry.
The integration of Britvic into Carlsberg’s operations is considered crucial by the analyst. The success of this process is expected to play a key role in the company’s future performance. Historically, Carlsberg has been recognized for its consistent improvement in group Return on Invested Capital (ROIC), a trend that was well-regarded under the previous management.
Despite the acquisition leading to an initial dilution of Carlsberg’s ROIC, the analyst noted that the metric remains higher than pre-COVID-19 levels. Moreover, there is potential for continued improvement as the company begins to realize synergies from the integration of Britvic.
The analyst’s commentary underscores the balancing act that Carlsberg faces as it seeks to maintain its strong performance metrics while expanding and diversifying its portfolio in a challenging economic climate. The Hold rating suggests a cautious optimism, acknowledging the potential for growth while recognizing the risks involved in the current market environment.
In other recent news, Carlsberg A/S has been the subject of multiple analyst reports highlighting its financial performance and strategic positioning. RBC Capital upgraded Carlsberg’s stock rating from Sector Perform to Outperform, raising the price target to DKK 1,020 from DKK 890. This upgrade was attributed to Carlsberg’s effective management of expectations, a positive outlook on the beer industry, and its strategic advantage of not being exposed to the U.S. market, which reduces tariff risks. Additionally, RBC Capital adjusted Carlsberg’s cost of equity to 8.0%, aligning it with industry peers, following a reassessment post the acquisition of Britvic.
In parallel, CFRA maintained its Buy rating for Carlsberg with a price target of DKK 1,000, reflecting confidence in the company’s future earnings potential. Carlsberg’s revenue for 2024 reached DKK 75.01 billion, aligning closely with consensus estimates, and the company experienced a slight organic growth of 2.4%. Despite a minor decrease in beer volumes in China, Carlsberg expanded its market share by approximately 30 basis points, indicating strong product offerings. Looking ahead, Carlsberg expects organic operating profit growth between 1% and 5% for 2025, influenced by factors such as the anticipated loss of the San Miguel brand in the U.K. and the integration of Britvic. CFRA adjusted the earnings per share estimate for 2025 to DKK 64.90, with a forward price-to-earnings ratio consistent with industry averages.
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