March 28, 2024
Today at
14:32
With BofA Securities, a third Anglo-Saxon stock exchange is starting the succession of the cookie baker. It immediately provides a price target that implies an increase of about 20 percent.
The Lotus Bakeries share
has been doing well all day because of London fan mail. The stock exchange BofA Securities starts the follow-up with a buy recommendation and a price target of 10,500 euros, good for an upside potential of 18 percent. The price target is immediately the highest of all analysts. Lotus, which closed on Wednesday at 8,640 euros, is followed by several Belgian analysts and by Berenberg and Exane. With BofA Securities, a third City house is added.
Not only does Lotus receive a buy recommendation, the cookie maker is also added to the SMID Cap Europe Best Ideas list, the favorites list for European small caps from BofA Securities.
Analyst Antoine Prévot calls Lotus a ‘quality growth compounder’. According to him, Lotus Bakeries will have an important advantage over many listed competitors in the coming years. ‘Lotus has no significant exposure to the high cocoa price. As a result, the company can boost its margins in 2024-2025, which will be more difficult for several peers due to expensive cocoa.”
Is Lotus not overvalued after an increase of 275 percent over the past five years and at 41 times the profit expected by BofA Securities for 2025? Prévot doesn’t think so. ‘We expect annual profit growth of 14 percent over the period 2023-2028. The price-earnings ratio does not reflect this. This significant profit growth is possible by capturing additional market share, expanding the profit margin through lower input costs and the planned investments to ensure future growth.’
Prévot assumes that Lotus will achieve further growth with healthy snacks and with the Biscoff caramelized biscuit brand. ‘Europe accounts for 73 percent of sales of Biscoff and healthy snacks. There is still a lot of growth possible in the US, Asia and Latin America.’ Bofa Securities also takes into account the success of the so-called Lotus Speculoos Sandwich Cookie, which competes with Oreo, and an increase in sales of healthy snacks to children.
This leads Prévot to conclude that Lotus can achieve an average organic turnover growth of 11.6 percent over the next five years. He is the only analyst who has Lotus on the buy list, the other recommendations are ‘hold’ or ‘sell’.
