On Tuesday, Deutsche Bank (ETR:DBKGn) adjusted its financial outlook on Heineken (AS:HEIN) NV (HEIA:NA) (OTC: HEINY (OTC:HEINY)) shares, reducing the beer giant's price target to EUR100.00 from the previous EUR108.00. Despite the price target cut, the firm maintained its Buy rating on the stock.
The adjustment followed Heineken's first-half results, which did not meet the heightened market expectations. The company's shares experienced a 10% decline on the day of the earnings report release. Deutsche Bank noted this drop seemed disproportionate to the anticipated adjustments in market consensus.
The bank has revised its forecasts for Heineken's financial year 2025 and later, expecting them to be higher than the current consensus. Nonetheless, Deutsche Bank anticipates that the consensus earnings per share (EPS) will largely remain unchanged despite these alterations.
The underperformance at the end of the second quarter was attributed to weather-related challenges, which are believed to have been the primary cause of the earnings miss. However, this sets a lower baseline for the second quarter of 2025, potentially making year-on-year comparisons more favorable.
Deutsche Bank also suggested that July's performance for Heineken might be showing improvements. However, any potential financial overachievement might be rechanneled into reinvestments, as indicated by management, which could limit the upward potential for near-term earnings estimates.
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