On Tuesday, Morgan Stanley updated its financial outlook for Geberit AG (SIX:GEBN:SW) (OTC: GBERY), increasing the price target to CHF 440 from CHF 418 while maintaining an Underweight rating on the stock. This adjustment follows the company's first-quarter results for 2024, which surpassed expectations, particularly due to stronger performance in Europe.
The firm's analysis indicates that Geberit's year-over-year sales growth for the first half of 2024 is now expected to be a slight decline of 0.9%, an improvement over the previously anticipated 3.1% dip. This revision aligns with management's positive remarks regarding April sales. However, the second half of 2024 forecasts remain at a growth of 2.6% year-over-year.
Regarding costs, Morgan Stanley anticipates raw material cost deflation to slow down to 3.5% year-over-year in the second quarter of 2024, which is not as favorable as the 9% deflation seen in the first quarter. This outlook is consistent with the company's own projections on raw material price trends.
The firm also expects Geberit's gross margin in the first half of 2024 to reach 72.3%, a substantial increase compared to the forecasted 70% for the second half of the year. This improvement in profitability is attributed to higher-than-expected volume growth, inventory rebuilding by wholesalers, and lower expenditures on IT and marketing than initially projected by Morgan Stanley.
Finally, Morgan Stanley has increased its forecast for Geberit's EBITDA margin for the full year 2024 by 140 basis points, bringing the expectation to 29.6%. This upgrade in the EBITDA margin forecast is a direct result of the modifications to the full-year 2024 earnings per share (EPS) estimates.
InvestingPro Insights
InvestingPro data suggests a nuanced picture for Geberit AG (OTC: GBERY), with a current market capitalization of $19.97 billion and a Price/Earnings (P/E) ratio of 29.14 for the last twelve months as of Q4 2023. While the company has experienced a revenue decline of 9.08% over the same period, it boasts a strong Gross Profit Margin of 71.25% and an Operating Income Margin of 25.08%. Additionally, Geberit's recent 1-week price total return shows a significant gain of 6.35%, reflecting a positive short-term investor sentiment.
Two InvestingPro Tips highlight Geberit's financial health and investor appeal. First, the company has raised its dividend for 13 consecutive years, indicating a reliable return for income-focused investors. Second, Geberit's impressive gross profit margins underscore its ability to generate earnings despite revenue fluctuations. These insights, along with 12 additional tips available on InvestingPro, could provide a deeper understanding of the company's financial stability and performance. Interested readers can explore further with a special offer: use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.