On Wednesday, BNP Paribas (OTC:BNPQY) Exane adjusted its stance on shares of Carlsberg (CSE:CARLb) A/S, shifting the beer company's stock from an Outperform to a Neutral rating. The firm also revised the price target to DKK 795.00, a decrease from the previous DKK 980.00. The adjustment reflects concerns about the company's mid-term beer volume growth, which is seen as heavily reliant on the Chinese market and consistent market share gains.
The analyst from BNP Paribas Exane expressed difficulty in envisioning a near-term shift in Carlsberg's prospects, given the expectation of flat like-for-like (LFL) volume growth (0.0% versus company consensus of +0.4%) and only modest LFL EBIT growth (+1.4% versus company consensus of +4.8%) for the fiscal year 2025. These projections are set against ongoing concerns surrounding the Chinese market, where Carlsberg has significant exposure.
Carlsberg's current stock valuation is described as inexpensive. However, the reassessment by BNP Paribas Exane suggests that the market's expectations may need to be tempered due to the anticipated performance metrics and external market factors. The revised price target of DKK 795.00 from DKK 980.00 indicates a more cautious outlook on the company's financial future.
The analyst's comments highlight the critical role of the Chinese market in Carlsberg's growth strategy, as well as the importance of maintaining market share. Without clear indicators of improvement in these areas, the firm's analysts find it challenging to predict a positive change in the near term for Carlsberg, leading to the downgrade to a Neutral rating.
Carlsberg will continue to navigate the complexities of the global beer market, with particular attention to its performance in China. The downgrade by BNP Paribas Exane serves as a signal to investors regarding the potential headwinds facing the company and the adjustment of growth expectations for the coming fiscal year.
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