Narrow-Moat JDE Peet's Has Unique Exposure in Attractive Coffee Category, but Shares Fairly Valued

We initiate coverage of JDE Peet’s with a EUR 39 fair value estimate and a narrow economic moat rating. Our valuation implies 2021 multiples of 23 times earnings and enterprise value/adjusted EBITDA of about 15, at the high end of our European packaged food coverage, a function of JDE Peet’s exposure in coffee and tea (and overindexation on high-growth subcategories within), categories with above-average growth potential in the global food and beverage industry. We think JDE Peet’s commands a narrow moat, supported by its entrenched position in the supply chain, well-known global, regional, and local brand names, and a cost advantage.