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On Friday, Citi analysts, led by Monique Pollard, maintained a Buy rating on Carrefour SA (CA:FP) (OTC: OTC:CRRFY) with a consistent price target of EUR17.00. The firm’s analysis suggests that Carrefour (EPA:CARR) has several strategic options that could significantly increase its value. These initiatives are expected to contribute to a 9% rise in the company’s earnings per share (EPS) by the fiscal year 2025 (FY25e), as reflected in Citi’s increased Bull case scenario, which projects a share price of EUR25.8.
Carrefour’s recent confirmation of a strategic review process, including the delisting of its Brazilian entity and a minority buyout, has led Citi to consider various potential opportunities for the retail giant. Among these opportunities is the expansion of Carrefour’s franchise business. Citi analysts believe that if Carrefour extends its franchise model further within France, it could result in approximately 5% EPS accretion by FY25e.
Another avenue for potential growth identified by Citi is through additional sale and leaseback transactions. These transactions could contribute around 2% to the FY25e EPS. Moreover, Citi suggests that the divestment of non-core parts of Carrefour’s European business could yield a similar 2% upside to the FY25e EPS.
The strategic options highlighted by Citi are expected to improve Carrefour’s financial position by reducing its net debt to EBITDA ratio by 0.3x by FY25e. This indicates a strengthening of the company’s balance sheet, which could be a positive signal for investors.
Carrefour’s stock price target of EUR17.00 by Citi reflects a 30% estimated total return (ETR) from its current level, indicating Citi’s confidence in the stock’s growth potential based on the outlined strategic measures.
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