Citi Affirms Buy Rating on Barry Callebaut Amid Cautious Outlook
Citi Reaffirms Buy Rating on Barry Callebaut Stock
Recently, Citi reiterated its Buy rating on Barry Callebaut AG (BARN:SW) (OTC: BYCBF) stock, maintaining a price target of CHF1,700.00. Analysts are looking at this leading chocolate manufacturer with a nuanced lens, projecting adjustments to earnings per share (EPS) for the fiscal years 2025 and 2026. The firm has modified its outlook, expecting an average decrease of around 2%.
Revised Forecasts for Volume Growth
This adjustment in EPS is informed by a new forecast for volume growth in fiscal years 2024 and 2025, which has been revised down to an anticipated increase of just 0.4%. In this context, Citi's analysis indicates minimal downside risks for Barry Callebaut’s volumes in the fourth quarter and for the entire fiscal year 2024. They estimate a slight decline of 1.6% for the fourth quarter, with flat growth expected for the full year.
Encouraging Crop Season Impact
Interestingly, Citi believes that the positive effects of an improved crop season last year have already been incorporated into the current stock valuation. Their EPS projections for 2024 and 2025 are closely aligned with broader market expectations, showing a modest potential upside of about 1%. Financial costs are projected to be around CHF190 million for both fiscal years, providing additional context to their analysis.
Balanced Risk-Reward Perspective
As Barry Callebaut gears up for its fiscal year 2024 reporting session, anticipated on November 6, Citi perceives a balanced risk-reward dynamic. Analysts are hopeful for encouraging insights that could arise from guidance clarification and updates regarding BC NL operations.
Challenges Ahead for Stock Re-Rating
Nonetheless, Citi cautions that achieving further stock re-rating before the end of the first half of 2025 may encounter obstacles. Factors contributing to this perspective include expected increases in downstream pricing, alongside the anticipated timing of key crop deliveries slated for the latter part of the first half of 2025.
Conclusion
In summary, while there are positive expectations for the adjustments and overall company performance, several challenges lie ahead. Investors remain optimistic, monitoring developments closely as Barry Callebaut prepares for its forthcoming fiscal disclosures.
Frequently Asked Questions
What is Citi's rating on Barry Callebaut stock?
Citi maintains a Buy rating on Barry Callebaut AG stock, indicating a positive outlook on its performance.
What is the target price set by Citi for Barry Callebaut?
Citi has set a price target of CHF1,700.00 for Barry Callebaut AG stock.
What adjustments has Citi made to the EPS forecasts?
Citi has adjusted the EPS forecasts for fiscal years 2025 and 2026, decreasing them by an average of 2%.
When is Barry Callebaut's fiscal year 2024 reporting scheduled?
Barry Callebaut is set to report its fiscal year 2024 results on November 6.
What challenges does Citi foresee for the stock?
Citi notes potential challenges in stock re-rating due to downstream pricing and crop delivery timing expectations.
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