On Thursday, Bernstein analysts updated their outlook on Danone SA (BN:FP) (OTC: OTC:DANOY), upgrading the stock from Underperform to Market Perform and raising the price target to €69.00 from €55.00. The revision reflects a positive view on the company's prospects, particularly in the yoghurt segment, which is expected to benefit from GLP-1 advantages.
Danone (EPA:DANO), known for its dairy products, is anticipated to gain from sustained growth in the yoghurt category, with around 60% of its Essential Dairy and Plant-Based (EDP) business poised to benefit from faster expansion in these areas. This shift is likely to contribute to accelerated long-term growth for the company. Additionally, Danone is positioned to capitalize on capacity constraints faced by other protein players in the U.S. market in 2025.
Despite the upgrade, the analysts noted that Danone has been consistently losing market share, even as the company promotes its turnaround story. The analysts believe that the current stock price fairly reflects Danone's value, given the market dynamics and the company's performance.
Bernstein set the new price target based on an enterprise value to EBITDA (EV/EBITDA) multiple of 9.8x, an increase from the previous multiple of 8.4x. This adjustment is in line with the firm's enhanced forward next twelve months plus one (NTM+1) EBITDA estimate of €5,194 for Danone.
The rating upgrade and price target raise come at a time when Danone is navigating a competitive and dynamic global food market, with a focus on health and wellness trends that could shape the industry's future.
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