Heineken: Société Générale raises target price.
(CercleFinance.com) - Maintaining their buy rating on the stock of Dutch brewer Heineken, Société générale (SG) analysts are now more optimistic about the group.
They have therefore raised their 12-month target price from 94 euros to 104 euros.
The first justification is that Heineken's medium-term guidance for EBIT margin growth will be renewed this year. SG therefore expects the company to renew guidance for 2018-2020; probably when it unveils its FY17 results next year.
Admittedly, the factors that have enabled Heineken's margin to rise from 14% in 2009 to 17% in 2016 have lost their relevance. In the meantime, the group has benefited from a more favourable geographical mix, which is now showing its limits. Not to mention the fact that cost savings are skewed towards more mature markets, while the group is increasing its exposure to emerging markets.
However, SG believes that sales growth in high-margin countries such as Mexico and Vietnam and the expected recovery in Nigeria are expected to boost profitability further.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
They have therefore raised their 12-month target price from 94 euros to 104 euros.
The first justification is that Heineken's medium-term guidance for EBIT margin growth will be renewed this year. SG therefore expects the company to renew guidance for 2018-2020; probably when it unveils its FY17 results next year.
Admittedly, the factors that have enabled Heineken's margin to rise from 14% in 2009 to 17% in 2016 have lost their relevance. In the meantime, the group has benefited from a more favourable geographical mix, which is now showing its limits. Not to mention the fact that cost savings are skewed towards more mature markets, while the group is increasing its exposure to emerging markets.
However, SG believes that sales growth in high-margin countries such as Mexico and Vietnam and the expected recovery in Nigeria are expected to boost profitability further.
Copyright (c) 2017 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.