Henkel "underweight," target price reduced

09.05.08 - J.P. Morgan Securities

LONDON, May 9 (newratings.com) - Analysts at JP Morgan maintain their "underweight" rating on Henkel AG & Co (HEN3), while reducing their estimates for the company. The target price has been reduced from ?35.00 to ?33.50.

In a research note published this morning, the analysts mention that although the 1Q08 results were ahead of expectations, the quality of these results was disappointing, with a slowdown in the like-for-like sales of the Tech Adh business. There continues to be downside risks to Henkel?s earnings, with margin pressure on account of high input costs and execution risks associated with ICI?s A&E integration, JP Morgan adds. The EPS estimates for 2008 and 2009 have been reduced from ?2.29 to ?2.20 and from ?2.75 to ?2.64, respectively, on account of reduced synergy savings projections.