On Wednesday, Deutsche Bank (ETR:DBKGn) adjusted its stance on Davide Campari-Milano Spa (CPR:IM), downgrading the stock from Buy to Hold and reducing the price target to €5.70 from the previous €8.50. The revision comes amid expectations of a challenging year ahead for the company.
The bank's analyst pointed out that while Campari (LON:0ROY) has the potential for superior revenue growth over the long term, due to the structural growth opportunity for its key products like Aperol and Campari, as well as its exposure to the tequila market through Espolon, there are concerns in the short term. According to high frequency data, Campari's growth advantage compared to other spirits has diminished.
For the year 2025, the analyst anticipates a 'below trend' year for Campari, as the company aims to adjust to a mid- to high-single-digit organic sales growth rate. This adjustment period is expected to be a factor in the revised rating.
Despite the current valuation of Campari's shares being seen as attractive relative to its recent history, Deutsche Bank believes that for a positive change in valuation to occur, the company needs to return to its previous growth algorithm. This outlook has led to the decision to downgrade the stock to a Hold rating.
The bank's analysis suggests a cautious approach to Campari's stock for the immediate future, reflecting a wait-and-see attitude until the company demonstrates a return to its historical growth patterns.
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