UBS Upgrades Intercos: Promising Growth Expected in Q3
UBS's Positive Outlook on Intercos SpA
On a recent update, UBS has reaffirmed its Buy rating on Intercos SpA (ICOS:IM) stock, setting a stable price target of EUR18.50. The firm is optimistic about the company’s expected performance in the third quarter, indicating a strong organic growth in sales that is likely to surpass current market consensus.
Expectations for Q3 Earnings
Intercos, known for its innovation in cosmetics, is scheduled to release its third-quarter earnings report on November 6, following the market close. UBS predicts an impressive organic sales growth of 15.5% for the quarter, notably higher than the Visible Alpha consensus estimate of 14.5%. This optimism is a signal of confidence in Intercos's potential recovery and growth.
Key Factors Driving Growth
The anticipated robust growth can largely be attributed to the Make-up division, where UBS estimates a significant 17.5% rise in organic sales. This increase is credited to the company addressing a backlog of orders that was created due to a cyberattack earlier in the year, which affected production capabilities as a result of material procurement issues.
At the end of June, Intercos recorded an impressive order book of €295 million, showcasing a 13% increase compared to the previous year. Overcoming these challenges reflects a strong recovery strategy that the company has implemented, enhancing its operational efficiency.
Performance Across Different Segments
In the Skin Care segment, UBS has forecasted a 9% organic growth for the upcoming quarter. This growth is supported by the successful performance of both Emerging Brands and Multinational clients, demonstrating strong sales particularly in markets across North America and Asia.
It's worth noting that the Skin Care division also ended June with a backlog order of €51 million, representing a 13% year-on-year increase. However, due to this segment's relatively smaller customer base compared to others, order intake data may exhibit more fluctuation.
Impact on Hair & Body Division
Interestingly, the effects of the cybersecurity incident were less pronounced in the Hair & Body division. UBS forecasts a healthy organic growth of 14.5% in this sector for the upcoming quarter. This growth can be attributed to the steady performance of the fragrance category alongside the accelerated success of Hair Care brands, particularly those that are emerging.
This varied performance across different segments indicates a diversified strategy that Intercos is employing to adapt to market dynamics while capitalizing on growth opportunities.
Conclusion
Overall, UBS’s sustained support for Intercos, reflected in their Buy rating, signals confidence in the company's ability to rebound successfully, supported by robust product demand and effective management strategies. Investors are keenly awaiting the Q3 earnings release to gain further insights into the company's trajectory and market position.
Frequently Asked Questions
What stock rating did UBS provide for Intercos?
UBS reaffirmed a Buy rating for Intercos SpA with a price target of EUR18.50.
When is Intercos scheduled to announce its Q3 earnings?
Intercos is set to announce its Q3 earnings on November 6, after the market closes.
What is the expected organic sales growth for Intercos in Q3?
UBS expects an organic sales growth of 15.5% for Intercos in the third quarter.
How has the cyberattack affected Intercos's performance?
The cyberattack initially hampered production due to procurement issues but has since been managed, leading to improved sales forecasts.
Which division of Intercos is expected to see the highest growth?
The Make-up division is anticipated to see the highest growth, with an estimated 17.5% organic sales increase.
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