Rémy Cointreau shares fall 2% as Bernstein downgrades on rally concerns

 Shares of spirits maker Rémy Cointreau fell 2.2% on Tuesday after Bernstein cut its rating on the stock to “market-perform” from “outperform,” saying the recent rally already reflects better times to come.

Bernstein left its price target unchanged at €53, which is 2% above the Oct. 26 close of €51.85.

The stock had gained 18% in October and 42% so far this year, against 11% and 2% for large-cap spirits peers, Bernstein said. It said a less gloomy, though still challenged, outlook drove the rise.

Rémy Cointreau trades at 25.9 times expected earnings over the next 12 months and 21.9 times for the 12 months after that, using Bernstein’s estimates, which are above consensus. That is about a 95% premium to large-cap spirits companies and about a 70% premium to the index, in both cases in line with or above its long-term premium, Bernstein said.

Bernstein said the recovery is taking longer than it first expected. It sees the near-term outlook as broadly stable to modest sales growth. 

It estimates a recovery in sales and sustained cost savings could deliver mid-teens annual earnings-per-share growth over three years, but said that is now fully reflected in the share price.

Bernstein noted some early positive signs. Cognac trends appear to be stabilizing in China, the company’s second-biggest market. 

In the United States, cognac remains weak, but the market’s rate of decline is slowing and Cointreau is strongly outperforming it. 

In the three months to August, Rémy Cointreau’s U.S. volumes rose 1.4%, ahead of the wider market excluding cocktails. Bernstein said the gain was driven by lower-margin Cointreau, which weighs on pricing and product mix.

Fiscal 2026 sales rose 0.2%, though margins remain under pressure, Bernstein said. The company’s fiscal year ends on March 31.

Chief Executive Franck Marilly’s three-year "RC Forward" plan targets €100 million of extra current operating profit by fiscal 2029, equal to annual growth of 17% from the fiscal 2026 base. 

Bernstein models an extra €68 million, or annual growth of 12%, and said it includes two-thirds of the upside in its estimates. If the company hit its full target, Bernstein said, it would likely add high-teens upside to its earnings-per-share estimates.

Details of the plan are due with first-half fiscal 2027 results on Nov. 25. Rémy Cointreau is due to report on Oct. 28, and Bernstein said investor relations staff sounded optimistic on a call before the close of the period.

For fiscal 2027, Bernstein’s estimates are about 2% above consensus for net sales, 4% for current operating profit and 6% for earnings per share.

Bernstein said the company holds almost twice as much aged cognac inventory relative to sales as it has historically. Net debt rose to 3.22 times EBITDA at the end of fiscal 2026 from 2.40 times a year earlier. Bernstein expects it to fall as profit grows and debt is paid down.

Bernstein listed faster recovery in China, improving U.S. trends and full delivery of the €100 million target as upside risks to its rating and target. Downside risks are further delays in China, weak U.S. trends and high inventories in the United States and China.

Rémy Cointreau has a market value of €2.74 billion.