Bernstein on Beiersdorf: Nivea shines, La Prairie recovers in the second half

Investing.com - Beiersdorf 's (ETR:BEIG) brand Nivea continues to show strong performance in Europe and emerging markets, while the luxury brand La Prairie is expected to recover only in the second half of the year, according to an analyst note from Bernstein released Tuesday.

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The analysts from Bernstein, who base their assessment on a call with Beiersdorf management, highlight the continued strong performance of the Nivea brand, especially in Europe and emerging markets. The mass market sector for Nivea remains robust, despite conservative market expectations for the second quarter.

"Nivea was strong in Europe and emerging markets, and the lack of any deviation from this trend might suggest that consensus for Nivea in the quarter is too cautious," the note states. The report indicates that the forecasted slowdown from 12.6% in the first quarter to about 7.7% in the second quarter may be too conservative, given the brand's ongoing momentum.

In contrast, the outlook for Beiersdorf's luxury skincare brand La Prairie remains challenging. Recovery in this segment is mainly expected in the second half of the year, primarily due to difficulties in the luxury market in China, both on the mainland and in Hainan. The note emphasizes: "The luxury markets in China have been challenging, affecting La Prairie. However, as previously announced, the comparatively weaker numbers from last year are expected to lead to a recovery in the second half."

In the derma segment, growth has slowed, especially in the US market, where a slowdown in price contributions has been observed. The report highlights a significant decline in derma growth from 21% to 10% and suggests that this slowdown might persist.

Bernstein's analysts also point to the impact of poor weather conditions on the US sun care market, affecting Beiersdorf's Coppertone brand. Despite these headwinds, the experts remain confident in the annual forecast for Tesa, despite a decline in the first quarter.

Overall, Bernstein continues to rate Beiersdorf as "Market-Perform" with a price target of 135 euros. "The ongoing slowdown outside of Nivea is likely to weigh on investor sentiment," the note warns, emphasizing the importance of upcoming product innovations and launches in the second half of the year.

Most recently, Beiersdorf's stock was priced at 141.10 euros, suggesting a moderate downside potential given Bernstein's price target.

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