On Friday, Berenberg raised the price target for Henkel AG (OTC:HENKY) & Co KGaA (HEN3:GR) (OTC: HENOY) to EUR88 from EUR86, while maintaining a Hold rating on the stock. This adjustment follows Henkel's release of preliminary financial results for the first half of 2024 and its earnings outlook for the full year, announced on July 17, 2024.
Henkel reported a group-level organic sales growth of 2.9% for the first half of the year, which was slightly below the Visible Alpha consensus of 3.2%. This growth was attributed to a 2.5% increase in pricing, which fell short of the 2.9% expected by consensus, and a 0.4% rise in volume, which was marginally above the 0.3% consensus estimate.
At the divisional level, the company's Adhesive Technologies segment posted an organic sales growth of 2%, which included a 0.2% growth in price and a 1.8% increase in volume. On the other hand, the Consumer Brands division experienced a stronger growth of 4.3%, driven by a 5.1% growth in price, despite a 0.9% decline in volume.
The group's adjusted EBIT margin stood at 14.9%, surpassing the consensus forecasts of 13.7%. This resulted in an adjusted EBIT of EUR1,610 million, which was 10% higher than consensus expectations. Additionally, Henkel's adjusted earnings per share (EPS) reached EUR2.78, exceeding the forecasted EUR2.57 by 8%.
The updated price target reflects the analyst's acknowledgment of Henkel's financial performance, which indicates resilience in a challenging market environment.
In other recent news, Henkel AG & Co KGaA has been the subject of multiple analyst evaluations, with Deutsche Bank (ETR:DBKGn) raising its price target from €75.00 to €77.00 due to the company's strong forward 12-month earnings per share (EPS) projections and robust gross margin results.
Concurrently, Citi maintains a neutral stance on Henkel, with a stock price target of €72.00. Citi's projections for fiscal year 2023 indicate an Organic Sales Growth (OSG) of around 2.7%, with volume growth contributing a minor 0.6%.
Citi also upgraded its margin forecast for Henkel for fiscal year 2024, predicting the company's overall margin to reach 13.2%. This upgraded margin outlook has led to a 0.6% increase in the fiscal year 2024 EPS estimate, expected to grow by roughly 12% when adjusted for constant foreign exchange rates.
Deutsche Bank's assessment highlighted Henkel's solid valuation, now aligning with the median valuation of Deutsche Bank's coverage, excluding L'Oreal. Despite potential risks that may emerge in the third quarter, such as pressure on consumer pricing or a downturn in industrial orders affecting adhesive volumes, Citi suggests these impacts might occur with a delay.
Deutsche Bank also underlined management's confidence in the company's outlook, pointing to expected cost savings and strategic allocation of advertising and promotion spending to support superior product innovations.
InvestingPro Insights
In light of the recent price target update by Berenberg for Henkel AG & Co KGaA, real-time data from InvestingPro can provide additional context for investors. Henkel's strong financial health is evidenced by its perfect Piotroski Score of 9, indicating robust operational efficiency and financial stability. The company's ability to maintain dividend payments for 30 consecutive years, coupled with a notable three-month price total return of 19.72%, underscores its appeal to long-term investors seeking consistent returns.
Despite a slight underperformance in organic sales growth compared to consensus estimates, Henkel's P/E ratio stands at 23.61, reflecting investor confidence in its earnings potential. Moreover, the company's solid cash flows have been able to comfortably cover interest payments, a reassuring sign for debt management. With a market capitalization of 33.82 billion USD and a dividend yield of 1.48%, Henkel presents an attractive profile for those looking to diversify their portfolio with a stable, dividend-paying stock.
For readers interested in further analysis and additional InvestingPro Tips on Henkel, including the company's forward-looking profitability and liquidity position, visit https://www.investing.com/pro/HENOY. Discover more insights and take advantage of the special offer using coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With 8 more InvestingPro Tips available, investors can gain a comprehensive understanding of Henkel's investment potential.
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