Jumbo’sagreementwith the BALFIN Group to expand the brand into six new markets adds a new chapter to the company’s investment story, though it has not yet altered Citi’s more cautious stance on the stock. The firm maintains itsNeutralratinganda price target of €25.00, anticipating a 10.7% upside from the price of €22.54 on May 26 and a total expected return of 16%, along with a dividend yield of 5.3%.
The new agreement covers Armenia, Azerbaijan, Georgia, Kazakhstan, Ukraine, and Uzbekistan. Citi notes that BALFIN is already a partner ofJumboin Balkan markets, but the new phase of development differs substantially from the current franchise model. Until now, existing markets have relied heavily onJumbo’ssupply chain infrastructure in Greece. In the new countries, however, BALFIN will establish a central logistics hub in China and will independently handle procurement, warehousing, transportation, and distribution.
The firm estimates that the model will not require capital fromJumboand may prove margin-enhancing compared to the existing franchise model. The company has not disclosed the financial terms of the agreement, meaning that the impact on financials cannot yet be quantified. Citi assumes thatJumbowill not recognize revenue or gross profit from these specific activities, but will likely collect trademark licensing fees.
In other words, the agreement may open a path to growth with lower capital risk, but not necessarily with an immediate and significant impact on revenue. For Citi, the new model is of strategic interest because it expandsJumbo’sgeographic presence in markets where the company does not need to take on the operational complexity of the supply chain. At the same time, however, the firm is keeping expectations low regarding the visibility of the contribution to earnings.
Citi’s valuation is based on the average of two methods: a price-to-earnings ratio approach and a discounted cash flow approach. The target price of €25.00 corresponds to approximately 10.5 times estimated 2026 earnings, while in the multiples model, the firm applies approximately 10 times 2026 earnings, with a discount relative to the five-year average, due to more limited growth prospects compared to the recent past.
In the bullish scenario, the share price reaches €30.00, with an upside potential of 33%. This assumes a valuation of 12 times 2026 earnings, close to past highs, and organic earnings per share growth of 8% in 2026. In the base case of €25.00, Citi estimates a valuation of approximately 10 times 2026 earnings, with the EBITDA margin normalizing to around 32% by 2028 from 37% in 2024 and an average annual earnings per share growth of 2.4% over the 2025–2028 period. In the downside scenario, the price falls to €20.00, a decline of 11%, due to a valuation of 9 times 2026 earnings and weaker margins, leading to a 5% decline in earnings per share in 2026.
The key positive catalysts Citi is monitoring are stronger growth and consumption, the de-escalation of geopolitical risks, a strong euro, better supply terms, and the potential restart of a share buyback program. On the downside, risks are linked to a weaker macroeconomic environment, particularly in Romania, faster expansion by competitors such as Action and online retailers, as well as potential disruptions in the supply chain or tariffs on Chinese imports.