Caesars Entertainment misses Q2 earnings expectations, shares edge lower
On Friday, Citi analysts downgraded shares of Barry Callebaut AG (BARN:SW) (OTC:BYCBF), a leading chocolate manufacturer, from Buy to Neutral, significantly reducing the price target to CHF790.00 from the previous CHF1,335.00. This adjustment reflects concerns over the company’s financial outlook and operational challenges anticipated in the coming year.
Citi expressed a cautious stance on Barry Callebaut’s near-term prospects, pointing to a "difficult set-up" and an "unclear catalyst path" over the next 12 months. The downgrade comes in light of recent credit outlook downgrades and a reported 6.5 times net debt/EBITDA ratio for the first half of 2025. Citi analysts noted that these factors could complicate any potential need for further financing.
The slower pass-through mechanism and continuing volume deleverage were also highlighted as contributing factors to the downgrade. Citi analysts mentioned that the 12-month delay in the company’s BC Next (LON:NXT) Level savings program is likely to obscure the visibility of fiscal year 2026 profits. They project that a volume recovery for Barry Callebaut might not be feasible until the second half of 2026, aided by potential cost of goods sold (COGS) deflation, while expecting flat volumes and mid-high single-digit COGS inflation in the first half of 2026.
Despite a roughly 30% devaluation in Barry Callebaut’s shares following its first-half 2025 results, Citi analysts see an uncertain path ahead for the stock. They acknowledged the possibility of upside risks, such as faster cocoa deflation, which may be supported by supply-demand fundamentals and could lead to a reacceleration of volumes and savings. Conversely, they warned of further downside risks, including prolonged cocoa inflation, permanent volume loss, potential credit rating downgrades, and rights issues.
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