On Wednesday, Deutsche Bank adjusted its outlook on Carlsberg (CSE:CARLb) A/S (CARLB:DC) (OTC: CABGY (OTC:CABGY)) stock, raising the price target to DKK1,200 from DKK1,100, while reiterating a Buy rating on the shares.
The revision reflects new calculations based on Carlsberg's strategic moves, including a recommended offer for Britvic and the acquisition of the remaining stake in Carlsberg Marston's Limited.
The bank's analysis suggests that Carlsberg's current trading valuation is at a significant discount compared to historical norms and industry averages. Specifically, Carlsberg's shares are trading at a 29% discount to its five-year average price-to-earnings (P/E) ratio and a 27% discount to the P/E ratios of European Staples.
According to Deutsche Bank's updated estimates, if Carlsberg's shares were to trade at its five-year average P/E of 19.4x based on projected calendar year 2027 earnings per share, this would indicate a potential share price of DKK 1,645. This represents a considerable 90% upside from current levels, without discounting for the time value of money.
In light of these findings, Carlsberg has now been positioned as Deutsche Bank's preferred stock within the European Beverages sector, overtaking Heineken (AS:HEIN). The bank's endorsement reflects confidence in Carlsberg's future performance and market position following its latest corporate actions.
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