Exane BNP Paribas Initiates Coverage on Brown-Forman with Updated Price Target
Brown-Forman recently caught the attention of analysts at Exane BNP Paribas, who initiated coverage with an Outperform rating and a price target of $48. This positive outlook comes as TD Cowen downgraded the company from Buy to Hold, setting a new price target of $48, and Barclays upgraded Brown-Forman from Equal Weight to Overweight with a new price target of $53.
In terms of financial performance, Brown-Forman reported first-quarter FY24 sales growth of 3%, reaching $1.04 billion. While this showed growth, it fell slightly short of analyst expectations. The company also reported earnings per share of $0.48, missing the consensus of $0.53.
Despite some financial hiccups, Brown-Forman managed to expand its gross margin by 100 basis points year-on-year to 62.7%. However, the operating margin contracted by 250 basis points to 31.5%, leading to a 4% decrease in operating income for the quarter, which landed at $327 million. As of July 31, 2023, the company held $426 million in cash and equivalents, with operating activities providing an additional $38 million in cash.
In other news, the U.S. Supreme Court recently heard arguments in a trademark dispute involving Jack Daniel’s, owned by Brown-Forman, and a dog accessory company. The case revolves around a parody chew toy resembling the iconic black-label whiskey bottle. Legal debates are ongoing regarding trademark rights versus First Amendment protections for creative expression.
Overall, the outlook for Brown-Forman remains positive, with various analysts offering differing perspectives on the company’s performance and potential. Wedbush analyst Gerald Pascarelli, for instance, recently initiated coverage on Brown-Forman with a Neutral rating and a price target of $70, adding to the diverse array of opinions surrounding this well-known spirits company.
