Barry Callebaut
Note: This is a daily stock update and the information stands true as of 10/07/25, 09:00 CET.
Company Update:
Expert Opinion:
Our expert is more cautious than our analyst.
First, how much is a stock generating CHF450m with a 2% growth in perpetuity worth? Well assuming an 8% cost of capital, you end up in say 4 years at CHF7.5bn which means a net present value of CHF5.5bn which is more or less the market cap. So unless there is subsequently higher growth down the line, he believes this positive outcome is priced in.
Second, he still has concerns regarding the end demand for sweet products with rise of GLP1 products. From that standpoint, it is no surprise for me that the US, where the usage of anti-obesity products is most developed, is also facing the most significant drop in volume. Therefore, he would rather wait for the stock to be massively undervalued vs that CHF5.5bn theoretical market cap before getting in the name.
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Company Update:
Q3 volumes dropped 9.3% in Q2, below consensus of a c6% drop. North America was especially weak with a 10% decline in volumes.
The group cut its FY Guidance with volumes down c 7% vs 5% drop previously. EBIT (in local currency) is still expected to improve but from mid to high single digit vs double digits previously but the forex impact is likely to be adverse. In all, our analyst expects the consensus will have to cut its EBIT estimate by c8% and the stock is likely to remain under pressure over the short term.
Interestingly, our very experienced analyst is more bullish over the long run. He believes the group will achieve its post-transformation targets and sees the company structurally generating CHF450m in free cash flow in 3 to 4 years. Furthermore, the drop in the price of cocoa futures means the pressure on the WCR is to ease and concerns about a potential capital increase are likely to diminish. In all, he suggests the expected drop in share price could be an opportunity for a long-term investor to jump in.
Expert Opinion:
Our expert is more cautious than our analyst.
First, how much is a stock generating CHF450m with a 2% growth in perpetuity worth? Well assuming an 8% cost of capital, you end up in say 4 years at CHF7.5bn which means a net present value of CHF5.5bn which is more or less the market cap. So unless there is subsequently higher growth down the line, he believes this positive outcome is priced in.
Second, he still has concerns regarding the end demand for sweet products with rise of GLP1 products. From that standpoint, it is no surprise for me that the US, where the usage of anti-obesity products is most developed, is also facing the most significant drop in volume. Therefore, he would rather wait for the stock to be massively undervalued vs that CHF5.5bn theoretical market cap before getting in the name.
For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu
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