Carlsberg Rises as RBC Sees Room for Rebound: Copenhagen Mover

Carlsberg A/S rose the most among Copenhagen’s benchmark stocks today after RBC Capital Markets said the brewer will rebound after underperforming its peers.

Carlsberg advanced as much as 2.6 percent, the most since May 8. The stock was up 1.6 percent at 525.5 kroner as of 10:31 a.m. in the Danish capital, the biggest advance among stocks on the Nasdaq OMX Copenhagen 20 Index. Trading volume in the company’s shares was more than 37 percent of the three-month daily average.

Before today, Carlsberg shares lost 6.7 percent this year compared with a 4.7 percent gain in the Stoxx 600 Food and Beverage Index, on investor concern that sales in Russia, its biggest market, are shrinking. RBC today raised its recommendation to outperform from sector perform, saying the stock is trading at a discount to other listed breweries.

“We believe that underperformance of this magnitude has thrown up an opportunity,” James Edwardes Jones, a London-based analyst with RBC, said in a note. “The outlook for Carlsberg is becoming less opaque, though still challenging.” RBC raised its 12-month price target for the stock to 640 kroner from 630 kroner.

Carlsberg, based in Copenhagen, on May 7 reported first-quarter profit that beat analyst estimates and said it won market share in Russia amid declining beer sales.

“The Russian beer market has been adversely affected over a number of years by government initiatives to reduce alcohol consumption in the form of excise duty increases,” Jones said. “We believe that the regulatory environment is showing signs of stabilising and scheduled excise duty increases, while still likely to result in retail price rises in real terms, should continue to moderate.”

Nordea Markets today said in a note that it also sees Carlsberg as “cheaply priced,” and said there’s a “large turnaround potential” for the brewery in Russia. Nordea’s Copenhagen-based analysts have a buy recommendation on the stock.

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