Campari’s Q3 sales rose 2.1% on an organic basis, implying a decelerating trend vs H1 (+2.7%). This was 2% below market expectations but partly offset by good news from the margin side (+270bps in Q3 ie +100bps in 9M). While we view very positively the group’s improved trajectory in 2015, we have no room for upward revisions of estimates and consider the valuation has become too high. At yesterday’s share price, the stock is trading at 25.4x P/E 2016, 6% above the peers’ average (even including Rémy Cointreau) and 36% above Pernod Ricard! We consider this as unjustified given Campari’s lower penetration and lesser diversification in terms of geography/category. We downgrade to Sell. Our Fair Value remains unchanged at EUR7.1 (-11%).
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