Undervaluation of Barry Callebaut AG by 34%: A DCF Analysis

Barry Callebaut AG's fair value estimate is CHF1,508, indicating a 34% undervaluation compared to its share price of CHF995. The 2-stage free cash flow to equity model suggests that the company's analyst price target of CHF1,175 is 28% lower than the estimated fair value.

Barry Callebaut AG, a leading player in the chocolate and cocoa industry, has been the subject of analyst attention, with a consensus rating of "Moderate Buy" based on the ratings of six Wall Street analysts over the past three months [1]. The average price target for the company stands at CHF1,022.50, representing a 3.25% upside potential from the current share price of CHF990.30.

Analysts' forecasts range from CHF875.00 to CHF1,300.00, with the highest target set by Kepler Capital and the lowest by Citi. Notably, analysts from Deutsche Bank and Berenberg Bank have reiterated their "Buy" ratings, while others like J.P. Morgan and Barclays have maintained their "Hold" positions. This diversity in ratings reflects varying views on the company's growth prospects and market conditions [1].

In addition to the analyst consensus, a fair value estimate for Barry Callebaut AG has been calculated as CHF1,508, indicating a 34% undervaluation compared to its current share price of CHF995. This suggests that the company may be trading below its intrinsic value, potentially offering an attractive investment opportunity [2].

The 2-stage free cash flow to equity model further supports this notion, as it suggests that the company's analyst price target of CHF1,175 is 28% lower than the estimated fair value. This discrepancy could imply that the market is not fully recognizing the company's potential, given its strong position in the B2B chocolate market and its ability to pass on cost fluctuations to customers [2].

However, investors should be cautious and conduct thorough due diligence before making investment decisions. While the undervaluation and analyst ratings suggest potential upside, it is essential to consider other factors, such as the company's financial health, competitive landscape, and future growth prospects.

References:
[1] https://www.tipranks.com/stocks/gb:0qo7/forecast
[2] https://finimize.com/content/bycbf-asset-snapshot