PZ Cussons PLC (LON:PZC) is “at a turning point” said Barclays, which initiated coverage with an ‘overweight’ recommendation.
Jonathan Myers joined the personal healthcare products firm last May as its first-ever external chief executive and the investment bank reckons that new initiatives to address non-core businesses and step up brand investment should revive growth.
READ: PZ Cussons leaves dividend unchanged as handwashing boosts sales
The FTSE 250 group needs a portfolio change, even though “focused businesses perform better in the long run and are valued at a premium”.
Meanwhile, Carex is the market leader in the UK, with 37% of the market share for hand wash and 27% for sanitiser, so increased demand in the professional hygiene channel, such as schools and shopping malls, represents a largely untapped opportunity with potential for incremental mid-term growth.
The Europe and Americas business does not get the valuation credit it deserves, according to Barclays, as the current price implies a 30% underlying earnings (EBITDA) discount to EU, Americas and Asia-Pacific businesses and seems to assign no value for Africa.
“We value Europe and Americas in line with Global Staples given leadership positions in its categories, best-in-class operating margins and exposure to hygiene, leading to our 300p price target,” analysts commented.
Shares rose 1% to 252p on Thursday at noon, having grown 34% since March 2020.
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