Strong Q1 Fiscal 2021 for Henkel; Shares Fairly Valued But Offer Leverage to Economic Cycle

Henkel reported strong first-quarter sales growth, with revenue above our forecasts. We are pulling forward our assumption on the rebound, but this is primarily a timing issue and has little impact on our EUR 98 fair value estimate for the preferred and ordinary shares. After two years of underperformance, Henkel's shares have rallied in recent months and we now regard them as being fairly valued. Having said that, these results show that Henkel is an almost equal split between defensive consumer products and more cyclical adhesives products tied to industrial production. The shares may perform well if the global economy continues to power ahead, while offering something of a natural hedge when the macroeconomic picture slows.