Ahold Delhaize Solid outlook should remove uncertainty and narrow the discount vs peers

Following the publication of the FY23 results, we have slightly adjusted our estimates to the upside. Although the environment will remain challenging in 2024, we are pleased to see AD reiterating its historical 4.0% margin target. Further accounting for the strong FCF outlook on the back of lower net capex spend, healthy balance sheet position and royal shareholder remuneration, we believe the share price decline over the recent months is overdone. Based on an estimated 12m forward P/E of 10.0x and EV/EBITDA of 5.7x, Ahold Delhaize is trading at its lowest valuation since the merger. Given the solid performance over the recent years, we believe this is highly unjustified and therefore reiterate our Buy rating and € 32.0 TP. We further think the Strategy Day on May 22nd and 23rd could be a trigger for the stock.