PDRDF - Pernod Ricard: Upgrade To Buy As Spirits Sales Recovery Continues
- We are upgrading Pernod Ricard to Buy after shares fell 13.5% from their peak, back to the level at our downgrade in June 2021.
- Pernod Ricard is a top global Spirits company and is benefiting from structural trends, including premiumization and rising affluence.
- Pernod Ricard targets 4-7% sales growth and 50-60 bps operating margin uplift annually, which implies operating profit growth of 6-9.5%.
- As of H1 FY22, EPS has already grown 20% above its pre-COVID level in two years, and recovery is still continuing, especially in Travel Retail.
- With shares at €187.90, we expect a total return of 53% (14.4% annualized) by June 2025. The Dividend Yield is 1.7%.
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Pernod Ricard: Upgrade To Buy As Spirits Sales Recovery Continues