HSBC ups estimates for ‘entrepreneurial’ Campari

Gruppo Campari “continues to impress” in the high-end spirits space, according to HSBC Global Research, with the bank increasing the drinks group’s target price by 19% on “the company’s strong outlook and operating model”.

In an beverages equities report, HSBC says it has reiterated its buy rating for Gruppo Campari and increased its target price from €6.20 (US$6.95) to €7.40 (US$8.30).

“Global spirits are in the middle of a global renaissance, especially at the high end. We think Campari is a distinct story and sits within a sweet spot within the broader European beverage group: it has the scale and ‘need to have’ brands needed to have a strong voice in most markets where it operates but small enough that a handful of successful brands can move the needle positively,” the analyst says.

The bank names Aperol, Campari and Wild Turkey as its three most important brands. “Aperol Spritz and Negroni are popular cocktails globally and Wild Turkey remains a potent niche brand in American whiskey, one we think Pernod Ricard probably would like to have back.”

In addition, HSBC states it is impressed by the “entrepreneurial culture” at the company, adding that its “speed of execution gives the company a competitive edge over larger players”.

The bank adds that is expects management to be “highly effective” at integrating and growing recent acquisition Grand Marnier.

Gruppo Campari reported “continuous outperformance” of its priority brands and key markets in the first quarter of 2017, when total sales increased by 15%.