Henkel Is Displaying Lower-Than-Expected Price Elasticity; Shares Remain Undervalued

Narrow-moat Henkel reported strong first-half organic sales growth of 8.9% year over year, ahead of expectations. Pricing accelerated in the second quarter to 11.2% year over year, with volume proving resilient at flat over the same period. After digesting the results, we are raising our fair value estimate to EUR 81 per share from EUR 80 to account for the time value of money. Some further adjustments to our forecast—a more favorable top-line delivery driven by pricing and a more negative margin outlook over the near term—are overall value-neutral.