On Wednesday, Citi reaffirmed its positive stance on Davide Campari-Milano S.p.A. (CPRI:IM) (OTC: DVDCY (OTC:DVDCY)), maintaining a Buy rating with a price target of €10.50.
The firm addressed recent concerns regarding Campari (LON:0ROY)'s first-quarter performance in 2024, suggesting that the perceived weakness in trading and the consequent decline in share price may be overstated. According to the firm, the slow start to the year was anticipated and is attributed to shipment timing rather than a slump in fundamental growth.
The firm anticipates an upturn in trading momentum in the second and third quarters and believes there is potential for fiscal year 2024 top-line and margin upgrades when the half-year results are announced on July 30. The firm is optimistic about the medium-term prospects, citing strong growth from key brands such as Aperol and Espolòn, which could mean that current market estimates are too modest.
Citi also highlighted the new management's intent to maintain Campari's history of exceeding expectations. The firm has initiated a 90-day Positive Catalyst Watch, implying that they foresee notable positive developments for the company in the near term. They also noted Campari's attractive price-to-earnings (PE) ratio compared to its European and global counterparts in the Staples sector, reinforcing their Buy rating and price target.
"We think the shares will bounce from the current low", Citi analyst noted.
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