Berenberg starts Magnum Ice Cream Company at 'hold'

(Sharecast News) - Analysts at Berenberg initiated coverage on The Magnum Ice Cream Company with a 'hold' rating and a 1,270p price target on Friday, implying a roughly 7% upside to the stock's current price. Berenberg believes that The Magnum Ice Cream Company's "strong innovation pipeline", underpinned by higher reinvestment by the company, positions it to outperform category growth.

The German bank noted that the company was pivoting to faster-growing subsegments and increasingly targeting markets with stronger structural growth drivers.

"However, we are 'hold'-rated as we identify potential downside pressures on its category growth outlook, driven by risk to its volumes, which implies uncertainty for its medium-term growth prospects," said Berenberg.

That being said, the German bank noted that Magnum's newly-announced €500m productivity programme may support underlying earnings margin expansion over the medium term.

"We value TMICC using a DCF, resulting in a 2026E P/E ratio of 16.3x. Based on our valuation, it offers a c9% discount to comparable European food manufacturing companies such as Nestle (18.7x), Danone (18x) and Emmi (17.4x). We believe that this is justified given the business's seasonality risks, single-category exposure and limited track record as a new company," added Berenberg.

Reporting by Iain Gilbert at Sharecast.com