Beiersdorf Rises as Nomura Increases Stock-Price Estimate

Beiersdorf AG (BEI) gained the most in more than two months as strategy changes to boost sales and cut costs at the maker of Nivea skin cream prompted Nomura Holdings Inc. analysts to raise their stock-price estimate by 20 percent.

Beiersdorf jumped as much as 2.8 percent to 62.56 euros, the biggest intraday increase since Nov. 2. With volume at 52 percent of the three-month daily average, the stock was trading up 2.8 percent as of 11:22 a.m. in Frankfurt, the biggest gain on Germany’s benchmark DAX Index. (DAX)

Chief Executive Officer Stefan Heidenreich, who joined Hamburg-based Beiersdorf a year ago from Swiss food company Hero AG, presided over a 41 percent jump in the company’s stock price last year with the so-called Blue Agenda plan that included more product development in emerging markets and revised packaging. Under his leadership, Beiersdorf has twice raised its forecast for sales, which had stagnated since 2008.

“Beiersdorf will finally be firing on all cylinders in 2013,” analysts at Nomura, including Guillaume Delmas and David Hayes in London, wrote in a report today. Heidenreich’s strategic priorities “should enable Beiersdorf to fully realize the consumer division -- and the Nivea brand’s -- potential.”

Dropping Rihanna

The reorganization, which included restoring the product’s familiar round blue logo, helped boost Nivea sales 5.4 percent in the first nine months of 2012. The CEO also dropped pop singer Rihanna, whom Nivea had used in advertising since 2011, as the brand’s celebrity endorser.

Nomura estimates Beiersdorf’s stock price will rise to 72 euros a share, versus an earlier estimate of 60 euros. The analysts reiterated their buy recommendation on the stock.

“We have been encouraged by Stefan Heidenreich’s initial decisions, which we believe have helped to accelerate the cultural change at Beiersdorf,” Delmas and Hayes wrote. “Although these first decisions seem to be paying off already, we think that there is still more to be done.”

Beiersdorf opened a research and development center in Wuhan, China, in May and a similar establishment, due to start operating in 2014, is under construction in Mexico.

The “renewed focus” on product innovation is “a clear signal that Beiersdorf’s consumer divisions is now committed to increasing its innovation rate,” the Nomura analysts wrote.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.