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Investing.com -- Morgan Stanley (NYSE:MS) has upgraded its rating on Henkel AG (OTC:HENKY) & Co. KGaA (ETR:HNKG) to “equal-weight” from “underweight,” citing signs that the company’s prolonged period of weak organic growth is ending, in a note dated Friday.
The brokerage raised its price target to €72 from €67, following an 18% year-to-date drop in Henkel shares compared with a 19% rise in the MSCI Europe index.
The upgrade comes after 16 consecutive quarters of volume declines in Henkel’s Consumer Brands division.
Recent scanner data from the United States and Europe shows sequential improvement, with both regions reporting positive trends in the last four weeks.
U.S. sales growth in that period was up 3% compared with a flat performance over the last 52 weeks, while European sales rose 4% after a long stretch of declines.
Market share losses have also narrowed, with some categories such as U.S. hair spray and European laundry detergent showing gains.
Morgan Stanley expects Consumer Brands volumes to grow in the third and fourth quarters of 2025, leading to a stronger second-half performance.
The brokerage’s forecast for group organic sales growth in 2025 is now 1.7%, slightly above the previous 1.6% estimate, with an adjusted EBIT margin of 15%, up from 14.8% in earlier projections. Earnings per share estimates for 2025 remain at €5.40.
Henkel’s valuation at roughly 12 times next-12-month earnings, near decade lows, and improving sales data limit the risk of further earnings cuts, the report said.
While Morgan Stanley still expects Henkel to lag household and personal care peers on topline growth over the long term, the current share price reflects a more balanced risk-reward profile.
The analysts said a more positive stance would require evidence of sustained share gains in key consumer categories, improvement in adhesive technologies’ end markets, or effective capital deployment strategies.