Crown Holdings Shares Reiterates Hold Rating on Heineken Shutdown in Vietnam By Investing.com

On Monday, Truist Securities maintained a Hold rating on Crown Holdings (NYSE:) with a firm price target for the stock at $88.00. This decision is in line with recent developments in Vietnam affecting the beverage industry, in particular the announcement that Heineken (AS:) will close its smallest brewery in the country due to falling domestic demand. This move by Heineken follows a surge in beer consumption following the Covid-19 pandemic, which has since seen a significant decline.

The decline in demand was partly attributed to Vietnam’s implementation of stricter drinking-driving laws. In 2019, the country set the blood alcohol limit for drivers at 0.00 in an effort to improve road safety, which unintentionally impacted alcohol sales. Tighter regulations pose a challenge for companies such as Heineken, which rely on solid beer sales in the Vietnamese market.

In addition to regulatory pressures, Vietnam’s Ministry of Finance is preparing a proposal that could further impact the alcohol industry. The proposal suggests increasing the tax on alcoholic beverages, including beer, from the current rate of 65% to an estimated amount of 70-80% by 2026. In addition, the tax could almost double by 2030, to around 90-100%. These potential tax increases pose a major hurdle for beverage producers operating in Vietnam.

The closure of the Heineken brewery is indicative of broader market conditions facing companies like Crown Holdings. As a packaging supplier, Crown Holdings is likely to be affected by such market developments, which could impact the company’s business prospects in the region.

Truist Securities’ reiterated Hold rating and price target for Crown Holdings reflects its assessment of these factors and their potential impact on the company’s performance. The fixed price target suggests that while there are challenges ahead, the current valuation adequately reflects the company’s prospects in light of changing market dynamics in Vietnam.

In other recent news, Crown Holdings has been in the spotlight for its first-quarter earnings and revenue, as well as its revised price target from Loop Capital. Crown Holdings reported adjusted EPS of $1.02 for the first quarter of 2024, which beat Loop Capital’s estimate of $0.94, the consensus estimate of $0.96 and the company’s own forecast range of 0.90-1.00 USD. Still, the company’s consolidated revenue of $2.78 billion was just below the estimate and consensus figure of $2.93 billion.

Despite a decline in net sales and diluted earnings per share, Crown Holdings reported growth in beverage can shipments in the Americas and Europe. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $383 million, exceeding both Loop Capital’s forecast of $365 million and the consensus estimate of $378 million.

Loop Capital reiterated a Buy rating on Crown Holdings and raised its price target to $106.00 from the previous $101.00. This adjustment follows Crown Holdings’ recent earnings results and is based on an adjusted 2024 enterprise value estimate relative to EBITDA.

In other recent developments, Crown Holdings provided earnings guidance for the second quarter and full year and expects adjusted free cash flow to be strong. The company is also betting on significant improvement in Europe in the second half of the year and expects a recovery in the transit industry by the fourth quarter. Here are some of the recent developments that investors should pay attention to.

InvestingPro Insights

As Crown Holdings navigates the changing landscape in Vietnam’s beverage market, highlighted by the closure of the Heineken brewery, real-time data from InvestingPro provides investors with deeper financial context.

With a market capitalization of $9.44 billion and a trailing twelve-month P/E ratio of 19.69, starting in Q1 2024, Crown Holdings has a solid valuation. The company’s gross profit margin for the same period was 20.63%, indicating its continued ability to generate profits above revenues.

InvestingPro advice shows that Crown Holdings has demonstrated its commitment to delivering shareholder returns by raising its dividend for three consecutive years. Moreover, the company’s shares are characterized by low price volatility, which ensures a level of stability in an uncertain market. With analysts revising earnings upwards for the coming period and forecasting profitability for this year, Crown Holdings appears to be maintaining a positive outlook despite external pressures.

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This article was generated with the assistance of AI and reviewed by an editor. More information can be found in our Regulations.