Lindt: UBS downgrades to 'sell'
(CercleFinance.com) - UBS has downgraded the share of Swiss chocolatier Lindt & Sprüngli to “sell,” with analysts saying that the market's optimistic expectations do not reflect the difficulties that the group is facing.
Alongside this downgrade, the broker has cut its 12-month target price from 78,000 Swiss francs to 76,000 Swiss francs.
Thanks to the expansion of its capitalisation multiples, Lindt shares have increased by about 30% over the past 12 months, hence outperforming the Swiss SPI index by around 25%. The stock's P/E has returned to its 2015 peak of 40x, while its organic growth now (which has been the case for almost three years) exceeds its medium-term target range of 6% to 8%.
"However," says UBS, "the growth model/market dynamics have become more unfavourable since then, and we think investor expectations Lindt can exceed its 2018/19 guidance are too optimistic." This is particularly so, as the soaring growth in health-food products, online sales and the relative saturation of Lindt's US distribution network are not playing in its favour, UBS concludes.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
Alongside this downgrade, the broker has cut its 12-month target price from 78,000 Swiss francs to 76,000 Swiss francs.
Thanks to the expansion of its capitalisation multiples, Lindt shares have increased by about 30% over the past 12 months, hence outperforming the Swiss SPI index by around 25%. The stock's P/E has returned to its 2015 peak of 40x, while its organic growth now (which has been the case for almost three years) exceeds its medium-term target range of 6% to 8%.
"However," says UBS, "the growth model/market dynamics have become more unfavourable since then, and we think investor expectations Lindt can exceed its 2018/19 guidance are too optimistic." This is particularly so, as the soaring growth in health-food products, online sales and the relative saturation of Lindt's US distribution network are not playing in its favour, UBS concludes.
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.