On Tuesday, Deutsche Bank (ETR:DBKGn) adjusted its price target for Lindt & Spruengli (LISN:SW) (OTC: LDSVF), increasing it to CHF 103,000 from the previous CHF 102,000, while maintaining a Hold rating on the stock. The firm cited Lindt's robust long-term prospects but noted the potential for near-term volume pressure due to anticipated cocoa price hikes.
The bank's analyst pointed out that Lindt is expected to navigate the industry challenges better than its competitors, emphasizing the attractiveness of the company's global growth narrative over the long term. Despite this, the analyst suggested that possible short-term volume dips could offer a more favorable point for investors to buy into the stock.
In light of modest revisions to earnings per share (EPS) forecasts, with a slight decrease of 0.8% for the fiscal year 2024, the analyst provided updated valuation metrics. Based on these revised projections, Lindt's stock is trading at 19.1 times its estimated 2025 enterprise value to EBITDA (EV/EBITDA) and 36.1 times its estimated 2025 price to earnings (PE). Additionally, the stock offers a 3.0% free cash flow (FCF) yield to enterprise value (EV).
Comparatively, the Staples sector, excluding Tobacco, is valued at 12.8 times its estimated 2025 EV/EBITDA and 20.4 times its estimated 2025 PE, with a 4.3% FCF yield to EV. The analyst highlighted that Lindt's valuation is currently aligned with its median long-term valuation relative to the European market.
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