Paul Tudor Jones sees potential market rally after late October
Investing.com - Jefferies has reduced its price target on Treasury Wine Estates Limited (ASX:TWE) to AUD8.50 from AUD10.00, while maintaining a Buy rating on the stock. The company’s shares, currently trading at $4.43, sit near their 52-week low of $4.40, having declined 44% over the past year.
The downgrade in price target comes amid challenges the company faces in China and distributor disruption in the United States, issues that Jefferies notes were already known to the market. Despite these headwinds, the company maintains strong financial health with a current ratio of 2.02, indicating robust liquidity.
Despite these headwinds, Jefferies highlights that the Penfolds brand remains "very strong" and points to "green shoots" in the U.S. market, where luxury growth exceeded 5% outside of California.
The firm believes Treasury Wine’s current share price is trading well below what Jefferies considers the company’s "hard asset value," suggesting potential undervaluation in the market.
Jefferies also indicates that the combination of depressed valuation and a new CEO could serve as catalysts for actions to extract value, potentially including an exit from the U.S. market.
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