Beiersdorf Misses in First Quarter as Europe Slow to Re-Emerge; Shares Appropriately Valued

Narrow-moat Beiersdorf missed our sales estimates in the first quarter, but we think this is more to do with the timing of the recovery from the coronavirus than any underlying weakness in the brand. We retain our EUR 89 fair value estimate and think the shares are fairly valued. Having said that, sales should rebound fairly strongly when consumer behaviour normalises, and it's possible the stock will regain momentum later in the year. The resignation of Stefan De Loecker as chairman of the executive board also has no effect on either our valuation or Poor Capital Allocation rating, which is based on the stockpiling of cash on the balance sheet that could be returned to shareholders.