UBS has moved Carrefour SA to a buy rating from neutral and raised its 12-month price target to €19 from €13.20, saying the shares are "too cheap to ignore." The brokerage noted the stock climbed 4.6% as of 05:30 ET (09:30 GMT) following the change in stance.
Valuation backdrop
In UBS's view, Carrefour is trading at about nine times forward earnings, which the firm characterises as roughly a 30% discount to the sector average multiple of 12.7 times. UBS added that this level represents a five-year low relative to peers, while the company also offers a dividend yield exceeding 7%.
Why UBS upgraded the stock
The brokerage laid out three primary reasons for the upgrade. First, UBS described Carrefour's 2030 strategy as sensible, saying it should help improve price competitiveness and facilitate market share gains, particularly in France. Second, UBS pointed to management guidance for a 25-basis-point improvement in Group EBIT margin by 2026, which the firm expects to be supported by lower losses in the Cora/Match business and the planned disposal of the Romania operations. Third, UBS emphasised the group's free cash flow profile, estimating a free cash flow yield of 14% including property sales and 12% excluding them, a level which UBS said creates scope for larger shareholder distributions, potentially including special dividends.
Updated financial outlook
UBS's forecast for Group EBIT stands at €2.33 billion for 2026 and €2.50 billion for 2027, figures that the brokerage describes as broadly in line with Visible Alpha consensus estimates of €2.35 billion and €2.50 billion respectively. At the same time, UBS trimmed its own forecasts, lowering EBIT estimates by 11% for 2026 and 10% for 2027, and cutting earnings-per-share projections by 14% for 2026 and 9% for 2027. UBS attributed these cuts to recent reporting changes and portfolio adjustments.
Looking to the near term, UBS expects Group EBIT of €776 million for the first half ahead of Carrefour's first-half results due July 23. The brokerage expects earnings to be skewed toward the second half of the year, estimating that roughly 66% of full-year EBIT will be generated in the latter six months. UBS's country-level first-half EBIT forecasts are €304 million for France, €170 million for Spain and €344 million for Brazil.
Performance by market
UBS said pricing momentum and customer perception metrics in France are improving, and described that trend as a good leading indicator for market share gains. Spain was called the group's best-in-class market due to strong competitive positioning and profitability. In Brazil, UBS noted that conditions were getting better as inflation and currency trends turned favourable following a difficult period.
Margin targets and scenario analysis
UBS retains a long-term 2030 EBIT margin forecast of 3.2%, which it notes is below Carrefour's own target of 3.5%. The brokerage says this gap reflects execution risk, while also leaving open the possibility of further upside to the share price should the company meet or exceed its targets. UBS's scenario analysis produces a base-case share price of €19, an upside case of €23 and a downside case of €14.
This assessment highlights UBS's view that Carrefour presents an overlooked value opportunity given its current valuation, dividend yield and prospective cash generation, even as the brokerage acknowledges execution risks and recent adjustments to its earnings model.