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Blackmores share price: where to next following 2019 results

Here’s where three top brokers think the Blackmores (ASX: BKL) share price is heading next.

Blackmores recent share price action at a glance

When Blackmores Ltd (ASX: BKL) released its FY19 results earlier this month, its share price fell sharply in response – dropping 14%.

This response was mostly unsurprising, with Blackmores posting sluggish revenue growth and a steep fall in (NPAT) earnings.

Adding to such concerns, was the regulatory issues posed by China’s recently revised e-commerce laws. Maybe most worryingly however, is that fact that such issues are expected to continue to put pressure on Blackmore’s bottom-line in 1H20.

Though Blackmores share price fell as low as A$64.58 in response, it has since rebounded modestly, rising to A$68.98 per share during today’s session, for example.

With all this considered, it’s worth examining what analysts currently think of Blackmores’s prospects now that the market has had time to digest the company’s FY19 results.

The Citibank take

Citibank has retained its sell recommendation on Blackmores and revised its price target down to A$63.00 per share.

Though Citibank thinks the Blackmores brand has value, execution issues and increased competition have all created significant downside risk for the company's shares.

In line with Blackmores Ltd’s own projections, Citibank also expects the company will continue to struggle with revenue growth in 1H20.

On the flipside, Citibank thinks the potential announcement of a Chinese partnership could help improve Blackmore’s distribution, regulatory and marketing capabilities in China.

Credit Suisse remains neutral

Credit Suisse may be the most optimistic out of the three analyst reports discussed here: placing a neutral rating on Blackmores, and lowering their price target to A$69.00 per share.

In saying this, Credit Suisse pointed out the negative impact that revised Chinese e-commerce laws have had on Blackmores’s bottom-line and warns that Chinese exports and the all-important daigou market are expected to remain impacted into the 2020 fiscal year.

Even still, Credit Suisse isn’t all negative, with the broker arguing that Blackmores should return to growth in FY21

Morgans rates Blackmores a hold

In line with Citibank and Credit Suisse, Morgans has also downgraded its previous price target on Blackmores. Here, Morgans currently rates Blackmores a hold and has a price target of A$66.10 per share on the stock.

Morgans has pointed out that Blackmores Ltd's FY20 guidance was vague and noted that the company is likely to continue to face comparable challenges in 1H20.

Morgans also points out that Blackmores remains reliant on cost savings measures to see a boost in its sales during the second half of FY20.

Though whether such measures will actually prove effective remain to be seen.


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