Investing.com -- HSBC downgraded Beiersdorf to "hold" from "buy" on Monday, cutting its price target to €88 from €90 as slowing Nivea sales to shoppers raised doubts over the German consumer goods maker's growth prospects in 2027.
Nivea's sales to shoppers slowed in the third quarter despite a boost from an exceptionally strong European sun-care season, HSBC said.
Without that seasonal support, the underlying performance would have been weaker, he said, reversing an improvement seen through the first half.
Beiersdorf reported third-quarter organic sales down 1.3%, missing analysts' expectations for a 0.8% decline, as electronics supply shortages weighed on its Tesa unit, where sales fell 4.3%, compared with consensus for 0.1% growth.
The consumer division's sales fell 0.7%, against expectations for a 1.0% decline. Nivea sales dropped 4.9%, broadly in line with expectations, including a 170-basis-point impact from a commercial dispute in Russia.
Management said the dispute had been resolved and normal sales should resume in the fourth quarter. Excluding Russia, consumer sales would have been marginally positive.
Derma sales rose 10.6%, beating expectations for 8.7% growth, while La Prairie sales increased 8.5%, against forecasts for 4.2%, supported by growth in China. Healthcare sales rose 5.7%, above expectations for 3.5%, helped by new wound-care products.
Beiersdorf maintained its 2026 guidance, with management expecting easier comparisons and easing electronics supply problems to support Tesa's full-year targets. However, electronics constraints remain a margin challenge for the unit because of the higher share of that business.
Nivea sales are still expected to decline in the fourth quarter because of a higher comparison base following last year's product launches. Management said all but one of its retailer disputes had been settled.
HSBC said Beiersdorf's cautious pricing strategy for next year, particularly in Europe following retailer disputes in 2026, could make it harder to protect margins as raw material and packaging costs rise.
Management plans to offset higher costs through sales volumes and a better brand mix, increasing uncertainty over the scope for margin improvement, HSBC said.
The bank cut its 2027 earnings-per-share forecast to €4.17 from €4.22 and its adjusted operating margin estimate to 12% from 12.2%, removing previously expected margin expansion.
HSBC's new price target implies 8.9% upside to Beiersdorf's Oct. 29 closing price of €80.80.
The shares have recovered about 20% from this year's low, reached below €70 amid concerns following the company's full-year results, and trade at nearly 20 times expected 2027 earnings, or about 16 times excluding €4 billion in cash.
HSBC said significant upside would require a clear acceleration in Nivea sales to shoppers or a substantial recovery in margins, neither of which it expects over the next 12 months.
Original Article
HSBC cuts Beiersdorf on slowing Nivea sales, limited margin upside
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