Continued Reopening Boosts Pernod Ricard in Q3 but Inflation Erodes Benefits of Price Increases

We are maintaining our EUR 167 fair value estimate of Pernod Ricard following the release of decent third-quarter sales numbers that showed most markets outside China and Eastern Europe continue to rebound as expected. We have tweaked our estimates for the rest of the year slightly to reflect continued price increases to offset inflation, but this has no impact on our valuation. Our forecasts are roughly in line with updated guidance of 17% organic operating profit growth, though we think inflation, continued lockdown measures in China, and the ongoing conflict in Ukraine present elevated risk to near-term earnings. Against that backdrop, we think Pernod's shares look fully priced.