JPM sees returns potential and normalization in 2025 for European consumer staples
27/11/2024 12:34
** Mapping out its 2025 outlook for European consumer
staples, J.P.Morgan says it sees increased cash returns as a key
feature and likely more buyback announcements in Q1 amid decade
low valuation
** "We see Staples attraction in consistent earnings
compounders, with increased upside from cash returns, at
reasonable valuation," it says
** It estimates total shareholder return (TSR) potential at
teens for the sector - 13-15% in soft drinks, tobacco and beers,
about 10% in home and personal care (HPC), high single digit in
foods and about 4% in spirits
** It expects the sector to deliver about 6% EPS growth in
2025 with limited divergence, saying 2025 is shaping as a
normalized year post COVID and high inflation, with sector
growth profile back to 2015-2019 levels
** JPM is most positive on tobacco, soft drinks, beer and
HPC, but it is cautious on spirits and foods and selective in
ingredients
** It notes that sector valuations is now at historical low
premium vs the market and at a historical discount vs U.S.
peers, it stays wary of high valuation stocks given the
convergence in multiples
** It flags highest risks of derating in L'Oréal OREP.PA ,
Lindt LISN.S , Haleon HLN.L , Remy RCOP.PA
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
JPM consumer staples https://tmsnrt.rs/3OwGMAA
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Ozan Ergenay)
((ozan.ergenay@thomsonreuters.com))