Brokers down on Blackmores Limited despite profit increase

Broker expectations were not met by Blackmores Limited (ASX: BKL) March quarter report, despite a profit jump of 19% for the first nine months of FY18 to $52 million for the health product retailer.

Shares in Blackmores have been on a slide downwards since late 2017, with Morgans unconvinced Blackmores growth profile is justified by its elevated valuation multiples with the broker reducing its net profit forecasts for FY18 by 3.9% and FY19 by 7.7%.

The March quarter report saw Blackmores log a revenue lift of 7.3% with sales in China notably on the increase by 21% but overall sales figures below expectations given changes in trading terms.

Blackmores acquired Victoria’s capsule manufacturer Catalent in the quarter for $43.2 million with hopes the move will prove lucrative in the future.

But while demand for Blackmores products remains strong, the company is yet to leverage growth in its Chinese market like peers in similar spaces such as A2 Milk Company Ltd (ASX: A2M) and Bellamy’s Australia Ltd (ASX: BAL).

Brokerage firm CLSA have downgraded Blackmores from buy to outperform, reducing its price target on the stock from $169 to $137.50.

Ord Minnett still has a buy on Blackmores based on overall strong demand and all eyes will be on the company’s upcoming reports as it rounds out FY18.

Blackmore's has revolutionised the health product market in its time, but check out 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now