Lindt & Sprüngli
Note: This is a daily stock update and the information stands true as of 14/01/25, 09:00 CET.
Company Update:
Expert Opinion:
Despite its recent drop in share price, Lindt still trades at an expensive 31x PE25 and 28x PE2026. While the underlying quality of the company is undeniable, there are some bumps down the road. First the consumer environment is still somewhat lackluster (even though the numbers in Q4 are encouraging). Second the price of Cocoa, even though it decreased a bit since its December peak, remains extremely high which will impact the prices and the overall level of demand. More importantly in my view, the potential rise of anti-obesity and weight-loss drugs could also have an impact on the overall demand for wettened products and notably chocolate. In all, despite the underlying quality of the company, I see no reason to buy the name at this stage. Note however that we have an add rating with a 9% upside, as the current valuation, while still high, is below the historical average.
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Company Update:
2024 sales: Organic growth was above forecasts driven by Europe and a 16.7% increase in Global Retail (now 560 own stores). As a reminder, North America in 1H was impacted by some special items (like destocking of major retailers and a shift in Easter orders into 2023);
Lindt pointed to an underlying growth of 6.0% which looks now confirmed in 2H.
Outlook 2024 profitability: Lindt now points to “at least” 16.0% EBIT margin in 2024. The previous guidance was “the upper end” of a 20-40bps increase; i.e. 15.8% to 16.0%. Together with today’s sales this points to an EBIT of >CHF 875mn that is (slightly) above forecasts.
Guidance 25: Organic growth in the 7-9% range. We expect low single digit volume growth and a double digit price impact.
Expert Opinion:
Despite its recent drop in share price, Lindt still trades at an expensive 31x PE25 and 28x PE2026. While the underlying quality of the company is undeniable, there are some bumps down the road. First the consumer environment is still somewhat lackluster (even though the numbers in Q4 are encouraging). Second the price of Cocoa, even though it decreased a bit since its December peak, remains extremely high which will impact the prices and the overall level of demand. More importantly in my view, the potential rise of anti-obesity and weight-loss drugs could also have an impact on the overall demand for wettened products and notably chocolate. In all, despite the underlying quality of the company, I see no reason to buy the name at this stage. Note however that we have an add rating with a 9% upside, as the current valuation, while still high, is below the historical average.
For daily updates, subscribe to our newsletter and for detailed daily updates, reach out to us at sales@alphavalue.eu
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