On Tuesday, Deutsche Bank adjusted its outlook on Barry Callebaut AG (BARN:SW) (OTC: BYCBF) shares. The firm reduced the price target to CHF1,900 from CHF2,000, while still endorsing a Buy rating on the stock. This change reflects a more cautious stance on the company's growth prospects amid potential headwinds.
Barry Callebaut's stock has shown resilience in the market, with a 6% increase year to date compared to a flat performance by European Staples.
The stock has also recovered significantly, up 31% from its yearly lows. Currently, Barry Callebaut's shares are trading at 22 times forward 12-month consensus earnings and have a 1.35 times forward 12-month price-to-earnings ratio relative to European Staples.
Historically, the company's stock has traded approximately 20% higher when earnings per share forecasts and volume growth were aligned. However, Deutsche Bank anticipates challenges due to the impact of retail price increases on volume sales.
In light of these considerations, the bank has revised its volume growth estimate for the year 2025 to a flat rate from the previous forecast of 1.7% growth.
The revised price target suggests that Deutsche Bank sees limited potential for a re-rating of Barry Callebaut's shares until there is evidence of sustainable volume growth. The bank's analysis implies a cautious but still optimistic view of the company's future performance in the market.
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