Is the Blackmores (ASX:BKL) share price in the buy zone?

The Blackmores Limited (ASX:BKL) share price came under pressure following its update. Is now a good time to buy its shares?

| More on:
blackmores share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Blackmores Limited (ASX: BKL) share price was out of form on Thursday.

The health supplements company's shares dropped 4.5% to $80.60.

Why did the Blackmores share price tumble lower?

Investors were selling the company's shares yesterday following the release of its shareholder update.

While no sales or profit data was provided, the update did reveal that trading conditions remain tough.

This is due to pressures in the daigou channel because of COVID-19, a milder cold and flu season, and a shift in shopping trends.

Is this a buying opportunity?

Yesterday's decline means the Blackmores share price is now trading 9% lower than its 52-week high.

However, one leading broker believes investors should be sitting tight and waiting for a better entry point.

According to a note out of Goldman Sachs, its analysts have retained their neutral rating and cut the price target on its shares to $74.80.

Based on the current Blackmores share price, this implies potential downside of over 7%.

What did Goldman say?

Goldman was happy with the progress of its expansion into India and its investment in digital and supply chain projects. It expects the latter to improve efficiency and drive gross margin improvements.

However, it has concerns over its short term performance.

Goldman said: "Short-term outlook remains uncertain due to ongoing discounting pressure in the market and uncertainty in travel recovery. Capital expenditure is expected to accelerate from 2H22. Dividend payout ratio target has been reduced to 30-60%. Overall, while longer-term growth and expansion opportunities look positive, we think short-term uncertainties remain material. We revise our FY22E and FY23E EBIT forecasts by -8.6% and -5.1% respectively/ Our revised 12m Target Price on BKL is A$74.80. We maintain our Neutral rating on BKL."

Goldman isn't the only broker that is unsure about Blackmores at present. On Thursday, Citi put a sell rating and lowly $59.20 price target on Blackmores' shares. It has concerns over demand in the lucrative China market.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

A cute young girl with curly hair sips a glass of milk through a straw with a smile on her face.
Broker Notes

Up 37% this year, why Macquarie expects A2 Milk shares to keep outperforming

Macquarie remains bullish on A2 Milk shares heading into 2026. Let’s see why.

Read more »

ASX shares Business man marking buy on board and underlining it
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

An older female ASX investor holds a gangster-style fist pump pose showing off gold rings with dollar signs on them.
Broker Notes

Why Macquarie forecasts Northern Star shares are set to surge 55%

Macquarie believes Northern Star shares are well-placed to rocket higher.

Read more »

Two miners examine things they have taken out the ground.
Broker Notes

Up 64% this year! What's Macquarie's price target for Lynas Rare Earths shares?

Clouds on the horizon?

Read more »

a group of people in business attire gather around a computer in an office environment with expressions of concern as they try to nut out the answer to a challenge they are facing.
Broker Notes

Leading broker just downgraded the Fortescue share price. Is it time to sell?

Downside ahead for the iron ore titan?

Read more »

a man sits back from his laptop computer with both hands behind his head feeling happy to see the Brambles share price moving significantly higher today
Broker Notes

Broker tips Domino's Pizza share price to rise 54% in FY26

Ord Minnett says the current Domino's Pizza share price offers "very attractive value".

Read more »

A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

These ASX 200 shares could rise 50% to 60%

Brokers believe these shares could deliver big returns for investors.

Read more »