On Wednesday, Deutsche Bank (ETR:DBKGn) adjusted its stance on Pernod Ricard (EPA:PERP) SA, the French spirits group, shifting from a "Sell" to a "Hold" rating. The financial institution also slightly increased its price target for the company's stock to €104.00, up from the previous €102.00.
The change in rating comes as the analyst acknowledges the company's appealing mix of product categories and geographical market presence within the spirits industry. However, concerns were raised about Pernod Ricard's market performance in the United States, where it is believed to be losing market share primarily due to less-than-ideal exposure to certain product categories.
The report also highlighted the potential risks of tariffs affecting Pernod Ricard's operations in China and the US. Despite these risks, the analyst suggests that the current valuation of Pernod Ricard's shares already partially accounts for these concerns. Nonetheless, the analyst points out that consensus estimates might still be overly optimistic about the company's financial outlook.
With Pernod Ricard's stock price now closely aligning with Deutsche Bank's revised target, the upgrade to a "Hold" rating reflects a neutral stance on the stock's current market position. The analyst's commentary indicates a shift in perspective, suggesting that the previous concerns that led to a "Sell" rating have now been tempered by the stock's valuation and potential risks that are seen as already factored into the price.
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