Henkel: Credit Suisse upgrades sell rating
(CercleFinance.com) - Credit Suisse believes that the correction of the Henkel preference share, which has lost 10% of its value in three months on the Frankfurt Stock Exchange, is now over.
As such, the broker has upgraded its sell ("underperform") rating on the stock to "neutral": whilst the qualities of the Adhesives division have been highlighted, this is not the case for the Consumer Division. Adjusted from 103.5 euros to 100 euros, the target is in line with the share's current price.
In their report, analysts examine the case of Tesa's adhesive division, which represents "c50% of sales but arguably less well understood than its consumer business," in particular represented by the Nivea brand.
In a "relatively fragmented" adhesives industry, Henkel has a market share of 14%, which is 2.5 times higher than that of its closest competitor. Beyond this critical mass, nearly half of Tesa's sales are made in emerging countries, "allows it to generate superior returns (both margins and asset efficiency)". In addition, Tesa is less cyclical than many of its competitors due to a more balanced customer mix.
In short, Credit Suisse values Tesa at 17x its expected 2019 EBITDA, compared to 16x for peers. However, analysts apply a ratio of just 14.5x to Henkel's consumer goods business (including Nivea), " which in our view is justified by its inferior top-line growth and sub-scale personal care presence". This justifies the broker's neutral rating on the stock.
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
As such, the broker has upgraded its sell ("underperform") rating on the stock to "neutral": whilst the qualities of the Adhesives division have been highlighted, this is not the case for the Consumer Division. Adjusted from 103.5 euros to 100 euros, the target is in line with the share's current price.
In their report, analysts examine the case of Tesa's adhesive division, which represents "c50% of sales but arguably less well understood than its consumer business," in particular represented by the Nivea brand.
In a "relatively fragmented" adhesives industry, Henkel has a market share of 14%, which is 2.5 times higher than that of its closest competitor. Beyond this critical mass, nearly half of Tesa's sales are made in emerging countries, "allows it to generate superior returns (both margins and asset efficiency)". In addition, Tesa is less cyclical than many of its competitors due to a more balanced customer mix.
In short, Credit Suisse values Tesa at 17x its expected 2019 EBITDA, compared to 16x for peers. However, analysts apply a ratio of just 14.5x to Henkel's consumer goods business (including Nivea), " which in our view is justified by its inferior top-line growth and sub-scale personal care presence". This justifies the broker's neutral rating on the stock.
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.