On Thursday, Bernstein analysts adjusted their outlook on Remy Cointreau (EPA:RCOP) SA (RCO:FP) (OTC: REMYY), increasing the price target to EUR100.00 from the previous EUR99.00. The firm maintained its Outperform rating on the stock. The analysts' assessment comes ahead of the company's third-quarter fiscal year 2025 results, which are expected to be announced on January 29th. The stock currently trades at $5.39, down significantly from its 52-week high of $11.05.
According to Bernstein analysts, the third quarter is anticipated to be challenging for Remy Cointreau, with performance issues in both China and the United States. Despite this, they believe that the company is on track to meet its full-year guidance, which projects organic sales growth (OSG) to decline between 15 to 18 percent.
They anticipate a gradual improvement in the fourth quarter and a particularly strong recovery in the U.S. market, although they note that the timing of this rebound is currently unclear. The company maintains impressive gross profit margins of 71.22% and operates with a moderate debt level, according to InvestingPro data.
The analysts highlighted that the market's positive response to any favorable news indicates that expectations for Remy Cointreau are low, suggesting that the stock is undervalued. They also pointed out the value of Remy Cointreau's inventory as an asset. However, they cautioned that the third-quarter results are not expected to be particularly impressive. Notable strengths include a 25-year track record of consistent dividend payments and a healthy current ratio of 2.64. InvestingPro subscribers have access to 12 additional investment tips and comprehensive financial metrics for deeper analysis.
The commentary from Bernstein suggests that while near-term challenges persist, there is an expectation for improvement in the following quarter. The slight increase in the price target reflects a cautiously optimistic stance on the company's ability to navigate through the current headwinds and capitalize on its potential for recovery, especially in the U.S. market.
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