Heineken N.V. (Frankfurt Code :HEIA), the world’s second-largest brewer, is well equipped for “superior growth” following a tough few years as it helped instil resilience in the company, analysts at Jefferies believe.
The Dutch company “has learned to be more agile through the past few tricky years helping it absorb volatility while still reinvesting for future growth”, the New York bank stated.
It added that the difficulty caused by the pandemic allowed the business to re-strategise and implement a plan that could allow for future margin expansion.
Jefferies argued that these changes allow Heineken to transform from a decentralised operating company into a more disciplined business.
“We also believe the company is becoming smarter and quicker on resource allocation and investment discipline,” the investment bank added.
The group is expected to exceed cost savings targets of €2bln (£1.8bn) for 2023 and to continue with further reductions of €400mln per year from 2024 onwards.
Jefferies also thinks that headwinds caused by poor performance in Nigeria and Vietnam could potentially subside.
The two countries account for 15% of Heineken’s total volumes and together experienced a 20% drop in sales during the first quarter.
“Whilst we expect both markets to be subdued in the near term, we would anticipate sequential improvement from the second quarter onwards as some of the transitory pressures ease,” Jefferies added.
The bank rates Heineken a ‘buy’ and targets a €120 share price, around a 15% upside to the €102 value the brewer opened at on Thursday.