MILAN, April 1 (Class Editori) — Citigroup raised its rating on Campari (+2.08% to 10.78 euros) from neutral to buy, with a target price confirmed at 12.3 euros. "Despite having rebounded from recent lows, Campari is still one of the worst-performing stocks in the sector since the beginning of the year," analysts noted, who, however, expect the accounts of the first quarter of 2022 to surprise on the upside, thanks to the strong trend of reopenings.
According to analysts, management's cautious guidance in 2022 could push up upcoming earnings, already reflecting the challenging environment related to the cost of sold goods and the portfolio of brands likely to be less exposed to potential trade-down pressures. "With traded shares at the lower end of its long-term P/E ratio, the 12-month risk/reward profile is trending upward," the investment bank explained.
For the first quarter of the year, Citigroup experts expect an organic sales growth of 13.6%, exceeding the consensus estimate at +10.9%. Deliveries are supported by a recovery in both Europe and the Americas. Moreover, according to the experts, with the reopening of trade particularly strong in many southern European markets, there may be room for a further upward surprise in the Group's results in the coming quarters. For the first half of 2022, Citigroup updated its earnings per share estimate by 0.7%, expecting full-year sales at 2.369 billion (2.17 billion in 2021), with a net income at 329 million (305 million in 2021).
The recovery in Italy continues as it does in Southern Europe, the Middle East and Africa where first quarter sales are expected to remain on a strong recovery trajectory. Nielsen data report Italy's value growing by 11.3% for Campari in the twelve weeks to February 27, while Fever-Tree and Pernod recently confirmed to be strong on domestic consumption trends across Southern Europe in January and February. "We expect the growth of Global Travel's retail sales to keep rebounding, but we expect absolute sales to still remain well below 2019 levels," Citigroup explained.
Consumer trends will remain strong. "We raised our estimates on organic sales growth to 8.4% for the first quarter of 2022. In Germany, we estimate a 13% organic sales growth. In the UK, organic sales growth is expected to increase to +4%, in spite of slow in-home sales, but on-premises sales are expected to remain strong. As for Russia, we do not expect a growth, but a flat sales trend over the period," the broker concluded.
According to analysts, Campari is also more immune to trade-down risks. "Investors are questioning the resilience of some markets against inflationary exposure, however Campari may be more immune to these risks than some competitors". In addition, the management is not expected to change the 2022 guidance.
(Source:Class Editori)
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