European beverages: DB cuts Pernod and Remy after dismal summer for booze stocks

Royal Unibrew A/S

09/09/2024 10:22

** Deutsche Bank says soft drinks are the clear winner in the European beverages sector, while spirits and beer have suffered from a combination of negative estimate revisions and multiple contraction post a dismal summer
    ** "Brewers have not performed as well as we expected due to a combination of adverse weather in June and a lack of COGS (cost of goods sold) tailwinds," says DB
    ** It still sees the beer sector better positioned than spirits on attractive valuations and more resilient demand, with better weather in July/August providing a tailwind to Q3
    ** "Spirits slowdown might be structural," DB adds, saying it does not expect U.S. spirits to return to the 4-6% growth rate achieved in 2000-2019, with 2-4% growth as the more likely outcome
    ** DB turns more cautious on China given macro and regulatory headwinds, and says Remy Cointreau  RCOP.PA , Carlsberg  CARLb.CO , Pernod Ricard  PERP.PA  and AB Inbev  ABI.BR  are at the biggest risk from this
    ** It names Heineken  HEIN.AS  its top pick, replacing Carlsberg, while keeping "buy" rating on both stocks
    ** It cuts Pernod Ricard to "sell" from "hold" and Remy Cointreau to "hold" from "buy" due to headwinds in China and the U.S.
     
    RATINGS & PRICE TARGETS
 COMPANY       RATING     OLD RATING   PT          OLD PT
 Campari       Buy        -            EUR 9.70    EUR
  CPRI.MI                                          10.40
 Carlsberg     Buy        -            DKK 1,100   DKK
                                                   1,200
 Coca-Cola     Buy        -            EUR 90      EUR 78
 Europacific                                       
 Partners                                          
  CCEPC.L                                          
 Coca-Cola     Buy        -            GBp 3,150   GBp
 HBC  CCH.L                                        2,950
 Heineken      Buy        -            EUR 99      EUR 100
 (top pick)                                        
 AB Inbev      Hold       -            EUR 54      -
 Remy          Hold       Buy          EUR 70      EUR 112
 Cointreau                                         
 Royal         Hold       -            DKK 550     -
 Unibrew                                           
 Diageo        Sell       -            GBp 2,430   -
  DGE.L                                            
 (least                                            
 preferred)                                        
 Pernod        Sell       Hold         EUR 106     EUR 120
 Ricard                                            
 
(Reporting by Clement Martinot)
((mailto:Clement.Martinot@thomsonreuters.com;))