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Investing.com -- RBC Capital Markets upgraded Italian spirits maker Davide Campari-Milano N.V. (BIT:CPRI) to “sector perform” from “underperform,” citing improved discipline, more realistic growth expectations and a share price that trades below its unchanged €5.80 price target, in a note dated Monday.
“We think Campari is on a course of rehabilitation,” analysts said, noting that while the broader spirits sector outlook remains uncertain, the company has shown progress by “committing to brand building investments” and resuming advertising and promotion spending, guided at 17% to 17.5% of sales this year.
The analysts pointed out that consensus forecasts have adjusted lower in recent months. Visible Alpha’s estimate for organic revenue growth has dropped by about 200 basis points for fiscal years 2025-26 and now aligns with RBC’s projections.
“We continue to see downside risks to margin expectations next year as we expect the company to prioritise growth investments - particularly in light of strong competition - over short-term margin,” the brokerage said.
Campari’s financial profile shows modest growth ahead. Revenue is expected to increase from €3.11 billion in 2025 to €3.22 billion in 2026 and €3.35 billion in 2027, representing annual growth of 1.4%, 3.5% and 4.1%.
Adjusted EBIT is forecast at €585 million in 2025, €579 million in 2026 and €609 million in 2027, with margins moving between 18% and 18.8%. EBITDA margin is projected at 23% in 2025, 22.1% in 2026 and 22.3% in 2027.
Earnings per share are expected to remain flat at €0.26 through 2026 before rising to €0.28 in 2027.
The stock currently trades at 21.6x earnings for 2025 and 2026, easing to 20x by 2027.
RBC noted that Campari’s FY26e P/E multiple of 24x remains above peers at about 16x, but still “trades at almost 15% discount to its 10-year average and returns to its pre-COVID19 levels.”
Free cash flow is projected at €174 million in 2025, €328 million in 2026 and €347 million in 2027.
Net debt is set to fall from €2.38 billion in 2024 to €2.31 billion in 2025 and €1.79 billion by 2027, bringing leverage from 3.2x EBITDA to 2.4x. Dividend per share is steady at €0.07, yielding 1.2% across the forecast horizon.
RBC’s scenario analysis sets an upside case of €8.90 per share and a downside of €4.60, compared with the current price of €5.61.
The valuation model assumes a cost of equity of 8%, cost of debt of 2.9% and a 2.5% perpetuity growth rate.
While challenges remain, analysts said Campari’s path depends on consistent marketing support and prudent expectations.
“After a three-year period of falling marketing/ sales…its investment has started to step up again. We think the CEO should prioritise rebuilding marketing support while establishing a deliberately prudent approach to expectations management.”