Pernod Ricard's Stock Climbs 1.39% Midday Following Barclays Upgrade
The stock of the world's second-largest spirits company shows solid progress this Tuesday, December 16, in mid-session, driven by a favorable recommendation change from a leading player. This increase occurs in a challenging market context for the group, which has faced disappointing performances in its key strategic markets for several months.
Midday Trading Update
Pernod Ricard's stock is trading at 77.34 euros at midday this Tuesday, December 16, up 1.39% from the previous day's close of 76.28 euros. Trading volumes remain modest with only 0.05% of the capital traded, indicating a certain caution among investors. This performance is part of a favorable weekly dynamic with a gain of 2.82% over seven days, but it does not offset the substantial losses recorded in the medium and long term. Over three months, the stock still shows a decline of 14.09%, while the annual correction reaches 32.13%, marking one of the worst performances in the CAC 40 during this period. This rebound follows Barclays' upgrade of its recommendation to overweight from equal weight on December 11, accompanied by a target price increase from 92 euros to 102 euros. The British bank believes that market concerns about volumes in the United States and tariff risks are overly incorporated into the current valuation of the stock. Barclays particularly highlights the long-term growth opportunities provided by ride-sharing services and the rise of robotaxis in the US market, while noting that Pernod Ricard is now less exposed to China than in 2023. This new target represents a potential upside of 32% from the current price, a level the bank describes as a very attractive entry point.
Technical Analysis
The stock is currently trading below its main moving averages, indicating a still bearish underlying trend. The price is below the 50-day moving average set at 81.92 euros and even further from the MM200 at 90.16 euros, confirming the structural fragility of the case. The Relative Strength Index (RSI) is at 42, positioning the stock in a neutral zone without a clear bullish signal, although it is gradually moving away from the oversold zone observed in recent weeks. The MACD indicator, however, shows a slight encouraging signal with a MACD line at minus 1.96 slightly rising above its signal line at minus 2.09, generating a positive histogram of 0.13. This configuration suggests the beginning of a reversal of the bearish momentum, although the indicator remains in negative territory and requires confirmation in the upcoming sessions. The stock is also trading above its technical support at 73.32 euros, a critical level defended in recent days, while the major resistance is at 84.88 euros. A breakthrough of this last threshold would be necessary to validate a real short-term trend change.
Operational Challenges
The group is going through a delicate period marked by operational difficulties in its key markets. In the first quarter of fiscal year 2025-2026, Pernod Ricard recorded a 14.3% decline in its published revenue, impacted by weak demand in China, stock adjustments in the United States, and unfavorable exchange rate effects. However, the management maintains its medium-term objectives, aiming for an average annual organic growth of between 3 and 6% for the fiscal years 2027 to 2029, while describing the current year as a transition year with an improvement expected in the second half. The group also finalized a bond issue of 1.2 billion euros at the end of October, a successful refinancing operation that demonstrates the solidity of the balance sheet despite headwinds. The executives recently conducted a transaction involving the sale of 526 shares for about 40,754 euros, according to AMF data. The stock remains under analyst surveillance, with Deutsche Bank recently resuming coverage with a hold recommendation and a target of 80 euros, while UBS maintains a neutral opinion with a lowered target of 75 euros. The one-month volatility stands at 8.74 with a negative CMF at minus 0.18, indicating that cash flows remain oriented towards the exit despite the technical rebound observed in recent days.
