Pernod Ricard: Berenberg upgrades to buy; targets 204 euros

(CercleFinance.com) - Broker Berenberg has upgraded its rating on the share of the French spirits group Pernod Ricard to buy (against a previous hold rating).
It has also sharply increased its corresponding target price from 138 euros to 204 euros, representing upside potential of around 35%.

"Since taking a stake in Pernod late last year, activist hedge fund Elliott Advisors has highlighted the operating margin gap that exists with Diageo and how this could be closed," the broker says in its report.

Berenberg recognises that this "gap" in operating profitability has, in part, been caused by structural issues; for example, the differing geographical presence of both groups.

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