Pernod Bounces Back Strong in the Third Quarter

Pernod Ricard reported strong third-quarter sales data and looks on track to at least meet our full-year growth expectations. We are maintaining our estimates but raising our fair value estimate to EUR 145 from EUR 143 after rolling our model. After a further rerating in the stock year to date, we consider Pernod to be overvalued. This was a decent quarter, and the stock may well continue to have momentum as the on trade reopens and consumers release the trillions of U.S. dollars of excess savings they have accumulated during lockdown. We think we have adequately captured that in our estimates, however, and think the market is projecting favourable market conditions too far into the future.