Eucerin's Global Success And Innovation Drive Bright Future In Derma And Beyond

Key Takeaways

• Strategic product launches and innovations across its brands are fueling strong revenue growth and expanding market share in the Derma segment.
  
• Expansion in North America and a robust NIVEA innovation pipeline are significantly enhancing revenue and earnings potential.
  
• Weakness in China and execution risks in new products could constrain Beiersdorf's revenue growth despite efforts in innovation and market share expansion.

Catalysts

Manufactures and distributes consumer goods in Europe, the Americas, Africa, Asia, and Australia.

• The successful launch of the Eucerin Epigenetic Serum and its rapid global rollout have already surpassed anticipated sales targets, indicating strong revenue growth in the Derma segment.
  
• Beiersdorf's expansion plans for its Thiamidol range and Eucerin face care in the U.S., combined with innovations like Epicelline, suggest potential revenue growth and improved market share in the Derma business.
  
• In North America, the accelerated growth of brands like Eucerin, Aquaphor, and NIVEA, coupled with strategic distribution through major retailers, points to significant revenue growth and a positive impact on earnings.
  
• NIVEA’s robust innovation pipeline for 2025, with major product launches and relaunches, is expected to boost revenue through increased consumer interest and market expansion.
  
• The planned product innovations and market expansion for La Prairie, despite current challenges in the Chinese luxury market, provide a potential long-term path to net margin improvement through premium pricing strategies.

Beiersdorf Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Beiersdorf's revenue will grow by 5.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 7.6% today to 10.8% in 3 years time.
• Analysts expect earnings to reach €1.2 billion (and earnings per share of €5.44) by about November 2027, up from €738.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €1.1 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 30.5x on those 2027 earnings, down from 38.0x today. This future PE is greater than the current PE for the GB Personal Products industry at 28.4x.
• Analysts expect the number of shares outstanding to decline by 0.13% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 4.97%, as per the Simply Wall St company report.

Beiersdorf Future Earnings Per Share Growth

Risks

• The continued weakness of the Greater China ecosystem negatively impacts Beiersdorf's luxury segment, especially La Prairie, which could constrain revenue growth despite efforts to gain market share. This challenge particularly affects earnings due to the high profitability associated with luxury products.
  
• The sun care segment underperformed expectations in the third quarter due to poor seasonal conditions, which might impact the consumer segment’s revenues and operational margins if adverse weather patterns continue.
  
• Beiersdorf faces currency headwinds resulting in lower nominal sales growth compared to organic growth, which could affect reported revenue and overall net margins if foreign exchange volatility persists.
  
• The tesa segment reported modest organic growth, with particular challenges in the automotive industry, indicating potential risks to revenue and earnings if the sector's downturn continues or worsens.
  
• High reliance on innovation and new product launches, such as Epicelline, poses execution risks that could impact sales if these products do not meet consumer expectations or achieve expected market penetration, directly affecting revenue and market positioning.

Valuation

• The analysts have a consensus price target of €143.82 for Beiersdorf based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €180.0, and the most bearish reporting a price target of just €106.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2027, revenues will be €11.3 billion, earnings will come to €1.2 billion, and it would be trading on a PE ratio of 30.5x, assuming you use a discount rate of 5.0%.
  
• Given the current share price of €125.1, the analyst's price target of €143.82 is 13.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.