Citi upgrades earnings guidance on Australia's Blackmores on higher China sales

Blackmores

11/01/2023 03:01

** Citi upgrades Australia's Blackmores  BKL.AX  to 'Buy'
from 'Sell' as industry feedback suggests that the company is
well positioned to benefit from relaxation of COVID curbs in
China
    ** Brokerage sees opportunities for additional cost out and
sees long duration prospects for the health supplement
manufacturer to exist in other Asian markets driven by gains in
distribution and increased sales velocities
    ** Citi raises Target Price to A$84.00 from A$58.55 driven
by combination of higher earnings, higher market multiples, and
post media speculation regarding interest from PE firms earlier
in 2022
    ** Forecasts 1H23 EBIT of A$37.5 million ($25.85 million)
and NPAT of A$21.5 million; estimates FY23 NPAT of A$42.5 mln
which represents a jump of 37% on pcp; all driven by bettered
China sales
    ** Citi also sees bettered relationship between co's board
and majority shareholder Marcus Blackmore following recent board
changes
    ** Two of 10 analysts rate the stock "buy", four "hold" and
four "sell" or lower; their median PT is A$73.40 – Refinitiv
data
    ** Stock fell 20.9% in 2022
($1 = 1.4505 Australian dollars)
 (Reporting by Rishav Chatterjee in Bengaluru)
 ((Rishav.Chatterjee@thomsonreuters.com;))