Nomura Securities Maintains a 'Neutral' on Brown Forman (BF-B); Feedback From Roadshow

Nomura Securities maintains a 'Neutral' on Brown Forman (NYSE: BF-B).

Nomura analyst, Ian Shackleton, says, "Feedback from a roadshow we hosted with the company in London: The company is benefiting from the ongoing US recovery (still over 50% of profits, we estimate), together with momentum in international markets, helped by the smaller business base and some roll-out of new distribution arrangements. With net debt almost paid off, use of cash remains an issue here; a new buyback has been started but the company also indicates that it would be interested in the right acquisitions. Valuation here remains high (2011F PER 18.8x) and we would prefer to gain exposure to the spirits recovery story through cheaper stocks – Pernod (14.5x) and Diageo (NYSE: DEO) (13.9x)."

For more ratings news on Brown Forman click here and for the rating history of Brown Forman click here.

Shares of Brown Forman closed at $68.75 yesterday.

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