Campari: Downgraded to Neutral on valuation grounds
Campari: (NEUTRAL vs. BUY, Fair Value EUR7 (-4%))Downgraded to Neutral on valuation grounds
The fundamentals of the group remain excellent, with Aperol accelerating further and Grand Marnier recovering. Over the past month, the stock rose by 12.3% on an absolute basis and 13.7% vs DJ Stoxx. We think this strong share performance has been partly helped by the group’s low exposure to imported spirits in the US. They represent an estimated 30% of its US sales vs 99% for Rémy Cointreau, 80% for Pernod Ricard and 70% for Diageo. The stock is now trading on an EV/EBIT of 24.9x in 2018 vs 21x for the sector. We downgrade to Neutral. The Fair Value is unchanged at EUR7.
Davide Campari-Milano is engaged in manufacturing spirits industry with an extensive product portfolio in three business lines: spirits, which includes internationally brands such as Appleton, Campari, Carolans, SKYY vodka and Wild Turkey, as well as brand in local markets including Aperol, Cabo Wabo, Cynar, Frangelico, GlenGrant, Ouzo 12, X-Rated Fusion Liqueur, Zedda Piras, and Brazilian brands Dreher, among others; wines, which main regional brands are Liebfraumilch, Mondoro, Odessa, Riccadonna, Sella&Mosca and Teruzzi&Puthod; and soft drinks, which covers the extended ranges of Crodino and Lemonsoda. Co. operates in 190 countries with registred positions in Europe and the Americas.
Since 1996, Bryan, Garnier & Co has been growing with an absolute conviction that the investment banking landscape would experience a major revolution: most of the large local generalist banking groups will disappear to the benefit of a handful of global powerhouses, and an emerging group of independent, highly specialised boutique investment banks.
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