On Thursday Blackmores Limited (ASX: BKL) will take centre stage when it releases its half-year results to the market.
Expectations have been rising fast ever since the health supplements company released its first-quarter results in October of last year.
That release revealed a 9% increase in first-quarter net sales to $134 million and a 28% increase in quarterly net profit after tax to $15.4 million. A key driver of this growth was its sales into China, with direct China sales up 28% on the prior corresponding period.
All in all, this left Blackmores in a position to "deliver growth on last year's reported profit" according to management.
While that outlook was a little on the vague side, one broker has more clear expectations for the first-half and full-year results.
According to a note out of Goldman Sachs, its analysts expect Blackmores to deliver sales of $377.4 million and earnings before interest and tax of $57 million for the first-half. This will be growth of 13% and 30% on the prior corresponding period.
Earnings per share is expected to come in at 223.2 cents, with an interim dividend of 160 cents per share declared.
The broker has pointed to strong sales growth data from the Tmall/Taobao platform as being a driver of this acceleration in sales growth. Goldman has advised that the data reveals a 59% lift in sales through the platform during the six months compared to the prior corresponding period.
What about the second-half?
Goldman doesn't expect sales growth to accelerate in the second-half and estimates growth of 6% on the second-half of FY 2017. All in all, this is expected to lift full-year sales to $771.7 million, up 11% year-on-year.
But thanks to greater stability in market pricing, a reduction in rebates, and the benefit of supply chain initiatives potentially beginning to flow through, Goldman thinks Blackmores will see a meaningful lift in its gross margin in the second-half.
Ultimately this is expected to lead to full-year EBIT growth accelerating 40% year-on-year to $120.6 million and full-year earnings per share of 473.1 cents, up 39% year-on-year.
Should you invest?
Goldman may only have a neutral rating and $173.20 price target on Blackmores' shares, but I think it is a buy alongside industry peers Bellamy's Australia Ltd (ASX: BAL) and A2 Milk Company Ltd (ASX: A2M).
Although, having said that, with all three companies reporting their earnings this week, I think investors may want to consider waiting for their respective results releases before hitting the buy button.
