On Thursday, RBC Capital adjusted its price target for Heineken (AS:HEIN) NV (HEIA:NA) (OTC: HEINY (OTC:HEINY)) to EUR77.00, up from the previous target of EUR75.00. Despite the increase, the firm has maintained its Underperform rating on the beer giant's shares.
The revision follows Heineken's first-quarter results, which showed a sales performance above expectations. However, RBC Capital noted that the stronger sales were significantly influenced by technical factors. The report highlighted that approximately 80% of the price inflation in Nigeria and soft comparisons in Vietnam were contributing factors to the sales beat.
Additionally, Heineken's price/mix growth of +5.1% was described as anomalous, especially when compared to the much lower price/mix growth of 2.0% reported by Reckitt, a peer company that also released its quarterly results on the same day. The analyst from RBC Capital expressed skepticism about the sustainability of Heineken's price/mix growth, given the context of broadly declining inflation.
The firm's commentary suggested that the first-quarter results are unlikely to sway the opinions of many observers regarding Heineken's stock. RBC Capital's stance remains unchanged, as indicated by the retention of the Underperform rating. The analysis appears to reflect a cautious view of Heineken's performance and the factors behind the recent sales figures.
InvestingPro Insights
As RBC Capital assesses Heineken NV 's (OTC: HEINY) performance with a cautious lens, InvestingPro data provides a broader financial perspective on the company. With a market capitalization of $55.82 billion, Heineken shows a solid presence in the market. The company's P/E ratio, which stands at 22.55, adjusts to a more attractive 17.86 when looking at the last twelve months as of Q4 2023. This suggests that investors may find the company's earnings power more compelling when considering the most recent performance.
Heineken's revenue growth also presents a positive picture, with a 5.72% increase over the last twelve months as of Q4 2023. This growth, coupled with a gross profit margin of 35.25%, indicates that Heineken has been effective in maintaining profitability despite market challenges. Moreover, the company's dividend yield stands at 2.44%, with a remarkable history of maintaining dividend payments for 33 consecutive years, as highlighted by one of the InvestingPro Tips.
While RBC Capital remains reserved in its outlook, another InvestingPro Tip suggests that analysts predict Heineken will be profitable this year, which aligns with the company's consistent profitability over the last twelve months. For investors looking for more in-depth analysis and additional InvestingPro Tips on Heineken NV, they can explore the 3 more tips available at: https://www.investing.com/pro/HEINY. To enrich their investment strategy even further, users can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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