In Citi’s view Swisse’s focus on growth in domestic grocery sales could be a risk to Blackmores’ earnings, particularly since Blackmores has stepped back from aggressive discounting to maintain a competitive position.
Swisse also reported a marketing spend far higher than Blackmores, at 30% of sales compared to Blackmores’ 10%. Citi notes Blackmores intends to increase marketing spend in the second half.
The Sell rating and target price of $73.16 are retained.
Sector: Household & Personal Products.
Target price is $73.16.Current Price is $73.90. Difference: ($0.74) – (brackets indicate current price is over target). If BKL meets the Citi target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).
