On Wednesday, UBS maintained its Sell rating on Beiersdorf AG (ETR:BEIG) shares (BEI:GR) (OTC: BDRFY), with a consistent price target of EUR111.00. The firm's analysis highlighted a mix of positive and negative factors following the company's first-quarter results. Beiersdorf reported a 7.3% Organic Sales Growth (OSG) for the quarter, surpassing the Vara consensus of 6.2%.
Despite this, the company's varied performance across different sectors and regions, along with investor concerns, resulted in a modest share price increase of +1.1% compared to the sector's -0.4%.
Investor worries are primarily centered on Beiersdorf's 2024 prospects in North America, where Q1 OSG dropped to +1.4% from +12.2% in the previous quarter. The company attributed this decrease to less favorable weather impacting Sun Care sales in Florida, although some improvement in the region has been noted in recent weeks.
Yet, Nielsen data has shown a continued lack of growth, and there are indications of market share losses in Body Care to private labels.
Moreover, there is apprehension about the potential normalization of prices, as the first quarter saw a sequential increase in pricing actions, which are expected to moderate throughout the year. In Europe, pricing actions are projected at around 3%, and 4-5% in Emerging Markets.
Visibility for the company's tesa business is also limited after a weaker than expected Q1, with a -5.4% OSG compared to the Vara consensus of +3.0%. This was due to declines in electronics in both China and the US, as well as in the auto sector. To meet the lower end of its full-year 2024 guidance of 2-5% OSG, tesa will need to achieve at least +4.5% OSG in the remaining three quarters.
On a more positive note, La Prairie has returned to positive growth, which could signal an alignment of sell-in and sell-out data from the third quarter onward, potentially leading to low to mid-teen OSG in the second half of the year. Furthermore, NIVEA's momentum in Sun, Deo, and Face Care categories remains strong.
InvestingPro Insights
As we delve into the financial health and market performance of Beiersdorf AG (OTC: BDRFY), certain metrics stand out. With a market capitalization of $32.35 billion and a high earnings multiple, reflected in a P/E ratio of 39.62 as of the last twelve months ending Q4 2023, investors may weigh the company's valuation carefully.
The company's impressive gross profit margin at 57.33% during the same period showcases its ability to maintain profitability.
Two notable InvestingPro Tips for Beiersdorf AG include the company's ability to hold more cash than debt, suggesting a strong balance sheet, and the fact that its cash flows can sufficiently cover interest payments, indicating financial stability. Additionally, Beiersdorf AG has maintained a commendable track record of dividend payments for 33 consecutive years, which may appeal to income-focused investors.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available that could provide further insights into Beiersdorf's financial and operational performance. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, and explore the full range of expert tips and metrics.
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