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On Wednesday, Berenberg initiated coverage on Pernod Ricard (EPA:PERP) SA (RI:FP) (OTC: PDRDY) with a Buy rating and a price target of EUR114.00. The initiation comes after the company, similar to its competitor Diageo (LON:DGE), withdrew its mid-term guidance for average top-line growth of 4-7% during its latest H1 FY25 results. This move was described by some as a ’clearing event.’
Pernod Ricard’s current market valuation, according to Berenberg, reflects a significant portion of the tariff risks. The firm believes that a resolution regarding tariffs could significantly aid in restoring a more standard valuation level in the short term. Presently, Pernod Ricard’s shares are trading at a FY26E EV/EBITA of 12.0 times, or 12.9 times when considering the impact of tariffs. This is in comparison to the company’s 20-year historical average of 14.0 times.
The Berenberg analyst highlighted the attractiveness of Pernod Ricard’s valuation amid the ongoing uncertainty caused by tariff news. With the market already pricing in many of the risks, Berenberg sees a favorable risk-reward profile for investors considering the stock.
The price target set by Berenberg suggests confidence in the company’s ability to navigate through the current economic challenges. The target also implies a potential upside from the current trading levels of Pernod Ricard’s stock.
Investors and market watchers will likely keep an eye on Pernod Ricard’s future earnings announcements and any developments regarding tariffs, which could influence the company’s stock performance and valuation in the market.
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