On Tuesday, Citi reaffirmed its Neutral rating on Brown Forman (NYSE:BFb) (NYSE:BF-B) stock and maintained a price target of $46.00.
The firm anticipates a subdued first quarter for the company, with Organic Sales Growth (OSG) expected to fall by 2.8%, a sharper decline than the consensus estimate of 1.4%.
The expected downturn is attributed to challenges in international markets, following an inventory rebuild after previously reported glass supply issues, and weaker trends in the U.S., as suggested by the latest Nielsen/NABCA data.
Despite the anticipated soft quarter, Citi predicts that Brown Forman will uphold its financial year 2025 guidance, even with first-quarter results potentially falling short of the full-year expectations.
The firm projects earnings per share (EPS) to be 2 cents below the consensus, factoring in the potential impact on gross margins from reduced shipments.
Citi's stance remains neutral due to the ongoing inventory normalization process within the spirits industry and the low visibility surrounding the company's fiscal year 2025 guidance. The report comes ahead of Brown Forman's scheduled earnings release for the first quarter of fiscal year 2025 on August 29, 2024.
The company's performance in the previous fiscal year's first quarter was notably influenced by the Jack & Coke product launch, which Citi notes was more significant in scanner data than in reported results.
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