Carlsberg stock rating reiterated at Buy by Citi on weather boost

Citi has reiterated its Buy rating and DKK1,040.00 price target on Carlsberg (CSE:CARLb) A/S (CARLB:DC) (OTC:CABGY), citing favorable weather conditions in Western European markets during May and June. According to InvestingPro analysis, the $19 billion beverage giant appears undervalued based on its proprietary Fair Value model.

The Danish brewer’s recent underperformance compared to competitors ABInBev and Heineken (AS:HEIN) appears overdone, according to the research firm. With a strong 47% year-to-date return and an impressive 27% return on equity, Citi believes Carlsberg is positioned for robust performance in Q2 and the first half of 2025. InvestingPro data reveals 8 additional key insights about Carlsberg’s market position and growth potential.

Citi notes that profit delivery from both core Carlsberg operations and the recently acquired Britvic (LON:BVIC) business will likely be weighted toward the second half of the year. The firm has opened a "POSITIVE Catalyst Watch" ahead of Carlsberg’s August 14 first-half results announcement. The company maintains a solid financial foundation with moderate debt levels and has consistently paid dividends for 25 consecutive years.

The research firm sees potential upside to the company’s organic and scope EBIT guidance if recent favorable weather trends continue through July. Citi’s analysis suggests Carlsberg’s current price-to-earnings discount compared to industry peers is excessive.

Additional upside could come from Britvic’s full-year contribution and possible accelerated balance sheet deleveraging through non-core asset disposals, according to the research note.

In other recent news, Carlsberg A/S has been the focus of analyst revisions and strategic evaluations. HSBC analysts downgraded Carlsberg’s stock from Buy to Hold, adjusting the price target from DKK940.00 to DKK910.00. The downgrade was influenced by a reassessment of Carlsberg’s financial outlook, including a reduction in the fiscal year 2025 organic sales growth forecast and a 2.0% decrease in top-line revenue projections. Despite these adjustments, HSBC noted Carlsberg’s resilience due to its minimal exposure to the U.S. market and tariffs. Meanwhile, Berenberg initiated coverage on Carlsberg with a Hold rating and a price target of DKK1,033.00. The firm emphasized Carlsberg’s performance in China and the recent acquisition of Britvic as crucial factors for growth. The integration of Britvic is seen as key to Carlsberg’s future performance, with potential synergies expected to enhance the company’s metrics. Both analyst firms expressed cautious optimism, reflecting on Carlsberg’s strategic moves amid economic uncertainties.

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