The brokerage cut its price target to €70 and said the company’s recent share price decline reflects a weaker growth outlook rather than an attractive entry point, News.Az reports, citing Reuters.
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“With the path to recovery of the brand uncertain and risk of further margin attrition, we view Beiersdorf’s derating as indicative of a lower growth trajectory rather than an attractive entry point,” analysts at RBC said.
RBC said the consumer goods company has outlined plans to revive Nivea through increased research spending, product launches and a push into higher-priced facial care products. However, the analysts said the strategy risks complicating the brand’s price positioning.
They added that stronger competition and the need for higher marketing spending to support new products could pressure margins.
The brokerage lowered its growth and profit forecasts for the company’s consumer segment, estimating operating profit in the division could come in 6% to 9% below broader market expectations over the next three years.
RBC said the company’s shares have already fallen sharply this year, making it the worst performer in its coverage universe and lagging the sector by about 15% to 16%.
While the stock now trades below historical valuation levels, the brokerage said the discount is justified by a weaker growth trajectory and uncertainty over how long it will take the company to restore momentum in its core brand.
