Carlsberg stock rating upgraded by UBS on soft drinks growth potential

Investing.com - UBS upgraded Carlsberg A/S (CSE:CARLB) stock rating from Neutral to Buy on Thursday, while significantly raising its price target to DKK1,060.00 from DKK810.00. The Danish brewer, with a market capitalization of $19.16 billion, has seen its shares gain 36.9% year-to-date.

The Swiss investment bank cited Carlsberg’s expansion into Europe’s faster-growing soft drinks category as a key factor in the upgrade, noting this strategic move coincides with early recovery signs in the company’s Asian beer business after two years of volume declines. This strategic pivot appears well-timed, as InvestingPro data shows Carlsberg has maintained solid 10% revenue growth over the last twelve months.

UBS forecasts 4.5% organic growth for Carlsberg in fiscal year 2026, with approximately 4% growth expected in the medium term, including about 2% volume growth overall. The bank projects soft drinks in Western Europe and Central Asia will contribute roughly 1 percentage point of this growth, with beer operations in China, Vietnam, and India adding another percentage point.

The analyst firm’s free cash flow estimates for FY2026/2027 stand approximately 16% above consensus expectations, with UBS anticipating reduced capital expenditures and the realization of working capital synergies.

UBS expects Carlsberg’s return to consistent volume growth and debt reduction should support a valuation more in line with European consumer staples peers. According to InvestingPro analysis, Carlsberg appears undervalued with its current P/E ratio of 18.4 and remarkably low PEG ratio of 0.13, suggesting attractive growth potential relative to its current price. InvestingPro offers additional insights with more ProTips and comprehensive metrics in its detailed Research Report.

In other recent news, JPMorgan has upgraded Carlsberg’s stock rating to Overweight from Neutral. This change comes with an increased price target of DKK975.00, up from DKK850.00. The investment bank anticipates a gradual recovery in Carlsberg’s volume despite ongoing cyclical challenges in key markets. Factors contributing to this positive outlook include favorable weather comparisons and potential boosts from World Cup activations. These developments indicate a shift in expectations for Carlsberg’s performance in the coming years.

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