On Tuesday, Citi reaffirmed its Buy rating on Barry Callebaut AG (BARN:SW) (OTC: BYCBF) stock, with a consistent price target of CHF1,700.00. The firm's analysis indicates a cautious outlook on the company's earnings per share (EPS) for fiscal years 2025 and 2026, with a reduction by an average of 2%. This adjustment is due to a lowered volume growth forecast for fiscal years 2024 and 2025, now anticipated at an increase of 0.4%.
Citi's projections suggest minimal downside risk for the chocolate manufacturer's fourth-quarter and full-year 2024 volumes, estimating a 1.6% decrease and flat growth, respectively. The firm anticipates that the impact of a better-than-last-year's crop season has already been factored into the current stock price.
The financial institution's EPS forecasts for 2024 and 2025 align closely with the Bloomberg consensus, showing a slight 1% upside. Finance charges are expected to hover around CHF190 million for both years.
As Barry Callebaut approaches its fiscal year 2024 reporting on November 6, Citi sees a balanced risk-reward scenario, with potential positive developments stemming from guidance clarification and updates on BC NL.
However, Citi notes that further stock re-rating before the first half of 2025 could be challenging. This is attributed to potential incremental downstream pricing and the estimated timing of the main crop delivery, which is expected towards the end of the first half of 2025.
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