© Reuters
By Scott Kanowsky
Investing.com — The reopening of the Chinese economy after strict COVID-19 restrictions should lead to a “sizeable” re-rating of Rémy Cointreau (EPA:) shares, analysts at Citi argued, adding some fizz to the stock on Monday.
In a note to clients, the analysts said the benefits for the French distiller from the expected recovery in China are not yet fully appreciated. As a result, Citi upgraded its rating of the Paris-based firm to Buy from Neutral, saying the stock represents a “rare opportunity” to purchase “structurally attractive, scarcity supported and defendable growth” at a relatively cheap valuation.
In November, prior to the sudden removal of most pandemic restrictions by Beijing, chief executive officer Eric Vallat predicted that appetite for its premium cognacs and whiskeys in China would remain strong despite an uncertain near-term outlook in the country.
Shares in Rémy Cointreau gained in mid-morning European trading, although they remain down by more than 11% over the last one-year period.
The company previously flagged that consumption habits of its premium beverages would normalize in the second half of its current financial year following a jump in demand from shut-in customers during the pandemic. However, it still believes that sales will eventually settle at figures far higher than COVID-era levels.
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