Beiersdorf’s growth outlook looks tough to achieve, says RBC

Investing.com -- Beiersdorf (ETR:BEIG) is unlikely to meet its full-year organic sales growth guidance of 4-6%, according to analysts at RBC Capital Markets, who described the company’s expectations as “unrealistically challenging.” 

In a note dated Friday, RBC said the required second-half acceleration in growth is improbable given a volatile consumer environment and intensifying competition.

RBC forecasts 2025 organic sales growth at 3.9%, 92 basis points below consensus. The outlook for 2026 and 2027 is similarly cautious, with forecasts of 5.1% and 4.2%, respectively, compared to consensus estimates of 5.9% and 5.5%.

Beiersdorf’s main consumer brand, Nivea, is under pressure, particularly in facial care, where market share has declined in key regions such as the U.S., China and Germany.

Despite upcoming launches, including the premium-priced Epicelline anti-ageing line, RBC expressed doubts over their ability to materially shift growth. 

The analysts noted potential cannibalization of Nivea’s existing Q10 range and risks tied to affordability in a price-sensitive market.

Cost pressures also cloud the earnings outlook. RBC cut its EBIT margin forecast due to expected increases in marketing spend to support new product rollouts. 

For 2025, the brokerage assumes a 40 basis point margin improvement, down from its previous 50 basis point estimate. 

It projects no margin gains in 2026 and modest recovery from 2027. By 2027, RBC’s adjusted EBIT forecast is 9% below consensus.

High-margin brands such as La Prairie also face headwinds. The brand’s prices remain substantially above competitors, up to 1,070% above median in some product categories, raising concerns over demand amid weak consumer sentiment. RBC does not expect a near-term recovery.

Despite the subdued forecast, RBC maintained its Sector Perform rating, citing Beiersdorf’s share price, which has underperformed both the broader consumer staples sector and L’Oréal by about 20% year-to-date. 

The stock currently trades at a 2026E EV/NOPAT multiple of 17x, which RBC views as reasonable given the company’s cash position.

RBC lowered its 12-month price target to €107 from €120. Its Adjusted Present Value model, based on a 7% cost of equity and a 2.5% terminal growth rate, implies a fair value of €101 per share. 

The brokerage expects free cash flow to rise to €854 million by 2027, up from €785 million in 2024, with FCF yield improving to 3.6%.

“We would strongly argue that management should resist any temptation to hold back on marketing spend in order to try to ’protect’ profitability,” the analysts warned, adding that doing so could worsen long-term growth prospects.