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On Monday, Citi reiterated its Buy rating on Heineken (AS:HEIN) shares (HEIA:NA) (OTC: HEINY (OTC:HEINY)) with a price target of EUR95.00. Currently trading at $34.93, the company commands a market capitalization of $39.67 billion. Citi analysts, led by Simon Hales, expressed optimism about the company’s prospects for the year 2025, despite acknowledging some challenges it may face. According to InvestingPro data, Heineken has maintained dividend payments for 33 consecutive years, demonstrating consistent shareholder returns.
The analysts noted that Heineken had experienced a period of earnings downgrades and communication disappointments, but they anticipate 2025 to be more favorable for the company’s investors. With annual revenue of $32.85 billion and a solid financial health score rated as "GOOD" by InvestingPro, the company maintains strong fundamentals despite near-term challenges. They pointed out that Heineken might lose one selling day in the first quarter and could see ongoing volume declines in Mexico and the UK, which might impact its pub business profitability. These factors could lead to the FY25E consensus organic EBIT growth aligning closer to Citi’s estimate of +5.0%, slightly below the consensus of +5.8%.
However, Citi analysts also highlighted that recent foreign exchange movements could support reported figures, leading them to upgrade FY25/26E earnings per share (EPS) by approximately 2% based on FX. They expect Heineken’s management to provide FY25E organic EBIT growth guidance in the range of +4% to +8% when the company reports its results on February 12th.
The analysts described Heineken as a "show me" story, indicating that the company needs to demonstrate its potential. They believe that with the delivery of 2024 targets on track, the consensus expectations for 2025 becoming more achievable, and the potential for upside from factors such as better summer weather in Europe, improved momentum in Vietnam, and a possible share buyback later in the year, the risk/reward profile for Heineken is becoming increasingly favorable.
In other recent news, research firm Bernstein has provided an optimistic outlook for Pernod Ricard (EPA:PERP) and Campari (LON:0ROY) in the spirits industry for 2025, while expressing a favorable view of Carlsberg (CSE:CARLb) and Heineken in the beer segment. Meanwhile, BofA Securities has revised its price target for Heineken, maintaining a Buy rating and highlighting potential for organic EBIT growth in 2025. However, Deutsche Bank (ETR:DBKGn) has downgraded Heineken’s stock to Hold and reduced its price target, citing concerns over the company’s financial performance. On the other hand, CFRA has raised its rating for Heineken from Hold to Buy, expressing confidence in the company’s strategic direction and potential for long-term growth. These recent developments indicate varying analyst perspectives on the future performance of these beverage companies.
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