Treasury Wine share price jumps on US opportunity and FY24 guidance update

This wine giant is talking up its significant US opportunity.

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A wine technician in overalls holds a glass of red wine up to the light and studies is closely with large wine barrels in the background, stored in a brick walled wine cellar.

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The Treasury Wine Estates Ltd (ASX: TWE) share price is racing higher this morning.

At the time of writing, the wine giant's shares are up 5% to $11.97.

Why is the Treasury Wine share price jumping?

Investors have been buying the company's shares this morning in response to the release of an update after the market close on Tuesday.

Overnight, the company held an investor and analyst event from its recently acquired DAOU Vineyards property in Paso Robles, United States.

At the event, management spoke positively about Treasury Wine's opportunity in North America. It also provided an update on its guidance for FY 2024.

In respect to the former, the company believes its DAOU acquisition has unlocked a significant long term growth opportunity for Treasury Americas.

It notes that it has created the number one luxury wine business in the US and filled a significant Treasury Americas portfolio gap at the US$20 to US$40 per bottle range. It has also complemented its existing luxury portfolio above the US$40 per bottle price tag.

Other positives that management highlighted are the significant value creation opportunity leveraging Treasury Americas and DAOU's unique strengths. It has also provided the scale to consider the creation of a standalone Treasury Americas Luxury division alongside Penfolds.

FY 2024 guidance update

Also boosting the Treasury Wine share price on Wednesday was management reaffirming its guidance for FY 2024.

At a group level, it continues to expect mid-high single digit EBITS growth for the year. This excludes the EBITS contribution from DAOU in the second half.

For Treasury Americas, it expects FY 2024 EBITS in the range of $223 million to $228 million. This reflects luxury portfolio growth, supported by increased availability, with premium portfolio revenue broadly in line with the prior corresponding period.

DAOU EBITS is expected to be approximately US$24 million, which is in line with expectations.


Looking ahead, management's expectations for DAOU are unchanged. The acquisition is expected to be earnings per share accretive (pre-synergies) and mid to high single-digit earnings per share accretive for the first full year of ownership. Over the medium term, average annual low double-digit NSR growth is expected.

Finally, work to assess the future operating model for the company's global portfolio of Premium brands is continuing. An update will be provided in August.

The Treasury Wine share price is up 6% over the last 12 months.

Motley Fool contributor James Mickleboro has positions in Treasury Wine Estates. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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