Barclays cuts STG on gloomy 2023 growth prospects, supply chain issues

Scandinavian Tobacco A/S

06/01/2023 14:41

** Barclays downgrades Scandinavian Tobacco Group  STOGR.CO 
to "underweight" from "equal weight," seeing negative organic
growth prospects for 2023, as well as margin pressure from
supply chain issues and wage inflation
    ** After initial benefits on volumes from Covid-related
lockdowns in 2020, and consequent tougher comps in the following
18-24 months, Barclays now expects yet more pressure for the
company, as the U.S. cigar business slows down
    ** Since cigar manufacturing is labour-intensive, the broker
sees significant margin pressure ahead for STG based on wage and
cost inflation in a number of countries 
    ** The broker cuts its target price to DKK 100 ($14.11) from
DKK 125
    ** Shares in STG are down around 7%, paring losses after
falling as much as 10% earlier in the day
($1 = 7.0883 Danish crowns)
 (Reporting by Louise Breusch Rasmussen)
 ((Louisebreusch.rasmussen@thomsonreuters.com))