Chill Before Europe’s Heatwave a Boon for Chocolate Maker Lindt

(Bloomberg) -- As temperatures soar across much of Europe, investors are likely to get a reminder of the inclement opening to summer when Swiss chocolate maker Lindt & Spruengli AG reports first-half results on July 23.

“The start of summer has been relatively cold, meaning people have been eating more chocolate in Europe this year,” Jean-Philippe Bertschy, an analyst at Vontobel Holding AG, said in an interview. This will probably help Lindt’s results, as will Easter taking place three weeks later than last year, he said.

Rain or no rain, demand for Lindt’s high-quality chocolate is unlikely to dampen in the long term even though consumers are increasingly seeking healthier food options, according to Bertschy, who has a hold recommendation on the stock.

“People won’t stop eating chocolate,” he said.

For more: Europe’s Bad Weather Pours Cold Water on Carlsberg, Heineken

Swiss peer Barry Callebaut AG’s business is also “strong” but healthier eating habits could impact it more than Lindt in the event of slower demand for the products of clients such as Hershey Co.’s or Mondelez International Inc., the analyst said. That’s because Lindt products typically contain more cocoa and less sugar.

Here are other highlights of the interview:

• Lindt shares are “highly d, but relatively not as much” as Barry Callebaut
• Barry Callebaut is a “great” company, but the stock is trading “at a demanding valuation, especially when considering its free cash flow”
• Vontobel has a hold recommendation and CHF1,700 12-month price target on Barry Callebaut, which last closed at CHF1,962

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