Household & Personal Care: Berenberg braces for volatile Q2

Procter & Gamble Hygiene and Health Care

10/07/2020 10:02

** Within its household and personal care (HPC) coverage,
Berenberg expects organic sales growth rates in Q2 to range y/y
from -33% for Estée Lauder  EL.N  to +11% for Reckitt Benckiser
 RB.L  
    ** It says L’Oréal  OREP.PA  ("sell") appears most
vulnerable, citing its recent share price rally (+10% YTD) and
likely double-digit like-for-like sales declines in Q2
    ** Colgate-Palmolive  CL.N  and Beiersdorf  BEIG.DE , both
"sell"-rated, are other names to avoid, Berenberg adds
    ** "On Colgate, we remain concerned that its valuation is
too demanding for the quality of growth on offer, while
Beiersdorf may struggle to deliver the growth and margin
improvements that management is targeting for 2021-23," it says
    ** The broker adds its top picks remain Reckitt Benckiser
and Estée Lauder, both rated at "buy"
    ** It expects Reckitt Benckiser to positively surprise the
market in Q2, says COVID-19 could underpin structurally higher
consumer demand for some of the company's key categories
    ** While Estée Lauder will likely face sharp declines in
short-term revenue trends, Berenberg says, it is best positioned
to deliver sector-leading organic sales growth over the long
term
    ** It keeps "hold" rating on Henkel  HNKG_p.DE  and Procter
& Gamble  PROC.NS 



 ((marta.frackowiak@thomsonreuters.com))