Pernod Ricard Earnings: Difficult Environments in Key Regions Weigh on Results

Pernod Ricard reported first-half fiscal 2025 results that were below our top-line estimates but above our profitability expectations. Weak consumer confidence in key markets as well as tariff-related tension makes the timing of a recovery in the spirits sector uncertain. With this, management provided an update to guidance that is below our near-term expectations but largely in line with our long-term estimates. After adjusting our forecasts for a slower-than-expected recovery, we lower our fair value estimate to EUR 121 per share from EUR 129 and continue to view shares as undervalued. We hold our view that Pernod Ricard is well positioned to capitalize on long-term secular drivers when the environments in the US and China turn.