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On Monday, Deutsche Bank (ETR:DBKGn) analysts adjusted their financial outlook for Pernod Ricard (EPA:PERP) SA (RI:FP) (OTC: PDRDY), a leading wine and spirits company. The price target was reduced from EUR103.00 to EUR97.00, while the stock rating remained at Hold. This change reflects a more conservative stance on the company’s performance, particularly in Asia and Europe.
The analysts predict a decline in Pernod Ricard’s organic revenue growth for the third quarter of fiscal year 2025, anticipating a drop of -1.8%. This is a significant shift from their previous forecast of +3.6%. The company is expected to maintain its previous guidance of a low single-digit decrease in organic net sales for the full fiscal year and to sustain its organic operating margin.
In anticipation of the company’s third-quarter sales report due on April 17, 2025, Deutsche Bank has updated its estimates. The revision takes into account a potential slowdown in the Asian and European markets. However, estimates for the United States have been increased to reflect pre-emptive shipments ahead of possible new tariffs.
For the full fiscal year 2025, Deutsche Bank now expects Pernod Ricard’s organic revenue to shrink by -3.2%, revised from an earlier forecast of -2.3%. Organic operating profit growth is also projected to decline by -5.0%, which is slightly less than the previously estimated -5.1%. The updated forecasts include the impact of foreign exchange rates, resulting in a decrease in the earnings per share (EPS) estimates for fiscal years 2024, 2025, and 2026 by 3.8%, 4.7%, and 4.8% respectively.
The analyst’s commentary indicates a cautious approach to Pernod Ricard’s performance in the near term, influenced by market conditions in key regions. With the updated financial projections, investors now have a revised benchmark to gauge the company’s upcoming financial results.
In other recent news, Pernod Ricard has seen adjustments in stock price targets from two major analyst firms. RBC Capital Markets has reduced its price target for Pernod Ricard from €140.00 to €120.00, while maintaining a Sector Perform rating. The adjustment reflects a reassessment of Pernod Ricard’s financial guidance amidst industry challenges and concerns over international trade disputes, which could affect the company’s operations. RBC analysts noted the company’s high net debt to EBITDA ratio, forecasting it to reach 3.5 times by June 2025, potentially limiting financial flexibility.
Meanwhile, Bernstein also revised its price target for Pernod Ricard, lowering it from €178.00 to €174.00, but keeping an Outperform rating. This revision is influenced by anticipated performance in the Chinese market, which is expected to impact the company’s first-half fiscal year 2025 results. Pernod Ricard’s first-quarter performance showed a 6% decline, though some improvement is expected in the first half, driven by better trends in America and Europe. Despite the challenges, Bernstein maintains cautious optimism for a recovery in the second half of the fiscal year. The firm also adjusted its financial model, reducing earnings per share estimates for fiscal years 2025 and 2026 due to ongoing market conditions in China.
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