Henkel: well oriented, Deutsche Bank less negative
April 18, 2024 at 05:32 am EDT
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Henkel gained ground on the Frankfurt Stock Exchange on Thursday, following a recommendation upgrade by Deutsche Bank, which was slightly less negative about the German consumer goods giant.
Henkel shares are currently up 1.7%, the second biggest gainer on the DAX behind Siemens (+1.8%), while the index is gaining 0.1% at the same time.
While he believes the company still has "a lot to prove", the analyst can't help noticing that the stock has lost 2.1% of its value since the start of the year, while the MSCI Europe has risen by 4% over the same period.
Knowing that its earnings per share (EPS) have outperformed by 15%, the PER on which the stock trades has now returned to 14x at 12 months, the research firm argues.
While it believes that the first-quarter publication will not lead to a downward revision of consensus estimates, Deutsche is concerned about the level of profit margins in adhesives.
As far as consumer brands are concerned, the professional points to the need to implement a cost-cutting program, but also sees a "considerable" need to invest in innovation.
He therefore raises his recommendation from "sell" to "hold", with a price target raised from 60 to 70 euros.
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Henkel AG & Co KGaA formerly known as Henkel Kommanditgesellschaft auf Aktien is a Germany-based company. The Company is engaged in the consumer and industrial business, operating in two segments: Adhesive Technologies and Consumer Brands. It operates in the regions of Europe, IMEA (India, Middle East, Africa), North America, Latin America and Asia-Pacific. The Company's Adhesive Technologies business segment covers adhesives, sealants and functional coatings, providing solutions for Mobility & Electronics, Packaging & Consumer Goods and Craftsmen, Construction & Professional under brands such as Loctite, Bonderite, Aquence and Technomelt. The Consumer Brands business segment focuses on the two global categories Laundry & Home Care and Hair. In this segment, the Company offers branded consumer goods in laundry and home care products and hair care, it also operates in hair professional business. Its portfolio includes brands such as Persil, Schwarzkopf, Dial, Purex, got2b and Palette.