Strong Finish to Fiscal 2021 for Best Idea Brambles; Shares Remain Compelling

Brambles is on track for a strong finish to fiscal 2021, with elevated at-home consumption patterns in North America and Europe—amid the ongoing pandemic—persisting into its third quarter. Accordingly, we upgrade our full-year fiscal 2021 EBIT forecast by 2.5% to USD 872 million, representing robust year-on-year growth of about 9.6%. Notably, our upgraded EBIT forecast sits above Brambles’ reaffirmed guidance for 5%–7% EBIT growth in fiscal 2021. Brambles’ unchanged guidance incorporates an expectation that volume growth in the remainder of fiscal 2021 will soften appreciably relative to the first nine months of the year, as it cycles a tough fourth-quarter comparative which also benefited from a pandemic-inspired increase in pallet demand. While we also expect volume growth to soften in late fiscal 2021, we think Brambles’ full-year guidance will likely prove conservative with pallet demand likely to remain strong throughout the remainder of fiscal 2021.