德龙公司（De'Longhi SpA）：上调至同等权重；不确定性犹存

Upgrade to EW; uncertaintyremains We upgrade De'Longhi to EW as we think it will be able tohandletariffrisk better than our previous expectations. DLG.MI/DLG IMEQUAL WEIGHTfrom Underweight European Small & Mid CapNEUTRALUnchanged On 13th May, De'Longhi reported a strong set of Q1 25 results, with revenues up 15% y/y, andadj. EBITDA up c.24% y/y, beating both our and consensus estimates. The stock has been downc-1% since results vs. the SXXP index up c1%. Price TargetEUR 30.00raised 30% from EUR 23.00 Price (27-May-25)EUR 28.60Potential Upside/Downside+4.9%Source: Bloomberg, Barclays Research Why we were UW:We initiated on De'Longhi with an UW rating, PT €23 on 4th April (see note) –justafterLiberation Daytariffannouncements on April 2nd. Our UW thesis was largelyunderpinned by two reasons.First, our concern that De'Longhi's EPS could see significantnegative risk from UStariffs,based on the margin compression that De'Longhi saw during themacro shocks of 2019 and 2022.Second, the impact of any macro weakness, over and above thedirecttariffimpact, which can be acute in a category such ascoffeemachines that relies ondiscretionary expenditure. Market Cap (EUR mn)4327Shares Outstanding (mn)151.29Free Float (%)46.4952 Wk Avg Daily Volume (mn)0.1Dividend Yield (%)2.90Return on Equity TTM (%)14.90Current BVPS (EUR)14.85Source: Bloomberg Why we are now EW:Previously, at its FY24 results in March 25, De'Longhi had expected atariffimpact of a c.€15-20mn hit on its EBITDA for FY25. At its Q1 25 results in May, the companyrevised this down to the lower end at €15mn, despitetariffsbeing worse than expected in March25 – we note that, even today, the current Europetariffsof c10% and Chinatariffsof c25% areworse than March 25 expectations despite rollbacks. Price PerformanceExchange-MIL52 Week rangeEUR 34.82-23.28 This established two things for us:First, the company is conservatively assessing itstariffexposures.Second, the company is in a far better place than in 2019 to mitigatetariffimpacts. DLG looks inexpensive at c.7x EV/FY25E EBITDA, while we consider its balance sheet to be ingood shape with cEUR400mn in net cash and FCF of EUR300mn. We have been impressed by itsmanagement team, having had an opportunity to spend considerable time with the CEO FabioDe'Longhi at LondonCoffeeWeek recently.To be UW an inexpensive, high-quality name likethis, which is the beneficiary of a strong thematic(coffeeculture), we need to be able toestablish a clear risk to FY25E/FY26E EPS, which we can't right now.Consequently, weupgrade the stock to EW, PT €30. Source: IDCLink to Barclays Live for interactive charting European Small & Mid Cap Why we are still not OW:President Trump has notably called out WalMart and asked it not toraise prices due totariffs.We see two potential scenarios that could emerge from here. Gaurav Jain+44 (0)20 3555 2501gaurav2.jain@barclays.comBarclays, UK In the first, WalMart (and its competitors) raise prices, enabling their suppliers also to raiseprices and to pass ontariffs.Consumer goods inflation worsens, which, if the experience of 2022 Morayo Adesina+44 (0)20 3134 9537morayo.adesina@barclays.comBarclays, UK Barclays Capital Inc. and/or one of itsaffiliatesdoes and seeks to do business with companiescovered in its research reports. As a result, investors should be aware that the firm may have aconflict of interest that couldaffectthe objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision. This research report has been prepared in whole or in part by equity research analysts basedoutside the US who are not registered/qualified as research analysts with FINRA. Please see analyst certifications and important disclosures beginning on page 12.Completed: 28-May-25, 15:29 GMTReleased: 29-May-25, 03:00 GMTRestricted - External is any guide, leads to downtrading or consumer pullback, which could lead to 2H pressure onDLG and its peers. In the second, WalMart and its competitors go slow on price increases, and ask their suppliersto share the margin pain, which would be clearly bad for DLG's margins. Due to the flip-flop nature oftariffs,it is hard to say with any certainty which scenario is morelikely to emerge. It is due to this, as well as the nuances of retail inventory management (RIM)accounting, that Walmart is not guiding to a Q2 EPS. We note that the home appliance category players have so far remained cautiously optimisticabout the US consumer. De'Longhi highlighted some pricing actions that it has taken at the endof Q1, which will flow through in subsequent quarters and also help it navigate thetariffimpact (see Breville Group Limited: De'Longhiliftsprices, 28 May 2025). We note that several ofDLG's peers – such as SharkNinja (SN US, not covered) – are also maintaining their guidanceand highlighting various instances of price increases or positive mix changes that can help themnavigatetariffs.SharkNinja actually inc