We resume coverage of Pernod Ricard with an Underweight rating. With the balance sheet constrained, key markets still difficult, and its largest competitor set to take a more aggressive position on price, we see pressure building. We expect DD earnings downgrades for FY27. Key Takeaways Market conditions remain tough... Following the termination of merger talks with Brown Forman (BFB), the focus is on how Pernod will respond to Diageo's price readjustment strategy. Meanwhile, market conditions remain tough. ...