Blackmores shares have been on form recently. Where next?
The post The Blackmores (ASX:BKL) share price is up 9% in two weeks: Can it go higher? appeared first on The Motley Fool Australia. –
The Blackmores Limited (ASX: BKL) share price has been a strong performer over the last couple of weeks.
During this time, the health supplements company’s shares have gained 9%.
Can the Blackmores share price go higher?
Unfortunately, one leading broker doesn’t believe the Blackmores share price can go higher. In fact, the broker believes its shares are severely overvalued at the current level.
According to a note out of Citi, its analysts have retained their sell rating and $55.50 price target on its shares.
Based on the current Blackmores share price of $76.94, this implies potential downside of 28% over the next 12 months.
What did Citi say?
Citi is bearish on Blackmores due to its belief that its key ANZ business will underperform over the medium term.
This is due partly to elevated competition, a softer than expected recovery in the pharmacy channel, a subdued flu season, and delays with the vaccine rollout. Citi also has concerns over supply chain issues and a direct to consumer (DTC) focus.
Citi commented: “We see ANZ, which we estimate represents over half of Blackmores FY21e EBIT, continuing to underperform over the short to medium term. Our concerns are i) competition remains elevated, ii) the pharmacy channel could take longer to recover due to a slower than expected vaccination program, iii) the CY21 cold and flu season could remain subdued due to Covid restrictions and health concerns limiting social interactions, iv) supply chain pressures may be leading to out-of-stocks and v) increasing focus on digital and DTC could increase channel conflict.”
Is anyone more positive?
One broker that is a touch more positive is Credit Suisse. It currently has a neutral rating and $77.00 price target on its shares. This is broadly in line with where the Blackmores share price trades today.
Though, Credit Suisse acknowledges that recent takeover speculation means there is upside risk to its price target.
Should you invest $1,000 in Blackmores right now?
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.