Chapel Down has appointed James Pennefather as its new CEO. He has extensive experience across the premium drinks industry, and this should stand the business in good stead as it executes on the attractive growth opportunity. Confirmation today that the all-important Q4 trading period has been strong is also highly reassuring. We view this as further evidence of excess stock in the off-trade in H1 being a one-off feature (masking resilient in-market consumer demand) and that the Group enters 2025 with positive momentum. Whilst 2024 has proved an uncharacteristically mixed year for Chapel Down, the fundamentals around market leadership, strong asset backing, and structural growth of English sparkling wine remain strong. Having been previously restricted, we update our forecasts, reflecting earlier guidance of low-single digit revenue decline in FY24. This rebasing has a knock-on effect on our FY25 and FY26 estimates. We believe 2025 will provide a clean base for reappraisal and for the shares (-55% YTD) to recover on evidence of double-digit revenue growth returning and margin recovery. We stay at Buy but set 57p as a new 12m TP (from 78p).
