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On Thursday, Goldman Sachs initiated coverage on Royal Unibrew (CSE:RBREW:DC) (OTC: ROYUF) with a Buy rating and a price target of DKK 630.00. The firm’s analysts highlight the company’s potential for robust profit growth and margin recovery in the coming years.
Royal Unibrew, a beverage company, has been recognized by Goldman Sachs for its impressive organic EBIT compound annual growth rate (CAGR), which is projected at 10.4% from FY25 to FY27. This rate positions Royal Unibrew favorably within the European Staples sector, according to the investment bank.
The company’s recent expansion through acquisitions has led to a temporary decrease in profitability, with EBIT margins declining from 21% in 2020 to 13% in 2024. However, Goldman Sachs anticipates a rebound to margins of 15.5% by 2027, a level last seen in 2015-2016. This recovery is expected as Royal Unibrew focuses on driving efficiencies and enhancing the performance of its newly acquired businesses.
Goldman Sachs’ outlook for Royal Unibrew is more optimistic than the Visible Alpha Consensus Data, with the investment bank’s EBIT and EPS estimates for FY25 to FY27 being 2% to 6% higher. This positive stance is rooted in a detailed country-by-country analysis conducted by the firm’s analysts.
The new price target of DKK 630.00 reflects an 18% upside from current levels, indicating Goldman Sachs’ confidence in Royal Unibrew’s potential for growth and margin improvement. The Buy rating and bullish price target offer a clear view of the investment bank’s expectations for the company’s financial performance in the near future.
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