Beiersdorf Earnings: Mass Market Segment Fared Well in 2022, Back to Growth in Premium in 2023

We are increasing our fair value estimate for narrow-moat Beiersdorf to EUR 93 from EUR 90 to account for the time value of money. Full-year 2022 results were in line with our expectations, with group revenue of EUR 8.8 billion and an operating margin of 12.4% (compared with EUR 8.8 billion and 12.2% in our forecast, respectively). In light of this, our long-term forecast remains largely unchanged. We expect a 4% average top-line growth through 2027, and a steady-state operating margin of 16%—assuming gradual margin recovery driven by milder cost inflation and continued portfolio transition toward more premium skincare categories. Shares strike us as overvalued at current levels, as Beiersdorf usually trades at multiples well above its peers due to its healthy balance sheet, with a net cash and securities position of EUR 4.5 billion at the end of the year.