Shares in Treasury Wine Estates Ltd (ASX: TWE) have traded sideways these past two months after taking a large hit back in January.
Scaling back, and that appears to have been the trend for Treasury Wine Estates over the past 12 months. Market pundits continue to evaluate the fallout from a number of macroeconomic and structural challenges that's ultimately sliced the company's earnings palate to pieces.
Can Treasury Wine Estates share price recover?
The company is still recovering from systemic challenges it faced in 2020 when the Chinese government put an end to its biggest export channel.
Back then, it imposed heavy tariffs on Australian wine entering China, and there's still a lot of uncertainty upon future sales into the country.
Net profit after tax (NPAT) came down from a high of $408 million in 2019 to $245 million in 2020 and $250 million the year after – a 39% dip overall.
Analysts at JP Morgan are in line with Treasury Wine's share price movement lately – neutral. The broker reckons it's a pivotal time in Treasury Wine's history, with the fallout from China's trade policy still taking effect.
"There remains a risk to ANZ margins in commercial, and the broader impact across the price hierarchy, from a reallocation from China of commercial wine, yet the reallocation of the Penfolds bin and Icon range is the key EBITS contributor," analysts wrote in a recent note.
"The limited access to the large and high growth China market has moderated P/E multiple expansion, yet this headwind is moderated due to business balance."
JP Morgan is neutral on the company with a $12 valuation, a step behind Citi, which values it at $13.78 per share.
Citi says that while Treasury Wines sales volumes have been down in the United States lately, the company has realised a 3% increase in average prices at the same time.
That's in-line with the company's strategy to focus on selling luxury and/or premium brands ahead of lower-cost substitutes.
Citi says to buy the stock, alongside 10 other brokers as per Bloomberg data. Meantime, 7 analysts reckon it's a hold, whilst Barrenjoey Markets singularly urges its clients to sell on a $10 price target.
Trading at $11.16 at the time of writing, the Treasury Wine Estates share price is still up almost 10% over the past 12 months.
