Deutsche Bank AG has revised its recommendation on Pernod Ricard SA (EPA:PERP), raising the stock from a "sell" rating to "hold" while reducing its 12-month target price to €65 from €74. The share price was last reported at €59.94.
The move follows a notable period of underperformance for Pernod Ricard. According to Deutsche Bank's note, since the firm's earlier downgrade on 23 February, the company's shares have fallen 24%. That decline matches a 24% shortfall versus the broader European Staples sector and compares to a 34% lag relative to the STOXX index.
Analyst Mitch Collett referenced public commentary from Brown-Forman in the bank's assessment. Brown-Forman has issued a release confirming that it is in ongoing discussions with Pernod Ricard, describing the prospective tie-up as "akin to a merger of equals" and stating that "Synergies from the contemplated combination are expected to be significant."
Deutsche Bank highlighted the difficulty of quantifying any potential value creation from the discussions, noting that full transaction terms are not available. The bank added that, in the absence of detailed terms, it would be surprised if a deal of the kind described generated material value for Pernod Ricard shareholders.
Market participants will be watching both the share price and any further disclosures from the companies involved. The bank's adjustment to a "hold" rating reflects a reassessment of near-term prospects given the stock's weakness and the uncertainties around potential strategic outcomes tied to the Brown-Forman discussions.
Summary of key facts
- Deutsche Bank upgraded Pernod Ricard from "sell" to "hold" and cut its target price from €74 to €65.
- Pernod Ricard shares last traded at €59.94 and have declined 24% since Deutsche Bank's prior downgrade on 23 February.
- Brown-Forman confirmed ongoing talks with Pernod Ricard, characterizing a potential deal as "akin to a merger of equals" with "significant" expected synergies.
- Deutsche Bank said it would be surprised if such a transaction produced material value for Pernod Ricard shareholders without full terms being disclosed.
Impacted sectors
- Consumer Staples - earnings and valuations for packaged beverages and spirits companies could be affected by share moves and potential consolidation.
- European equities - the STOXX and broader regional benchmarks are relevant comparators for performance analysis.