Blackmores’ Share Price Sinks after Yesterday’s Gains

Blackmores Ltd [ASX:BKL] shares traded higher following news that investment services company Morgan Stanley upgraded BKL shares to a rating of ‘equal weight’.

Yesterday, Blackmores’ share price had risen by 6.14%, to sit at $99.00 apiece before deflating  today, sinking 4.09%.

Blackmores shares demand benefit

The broker note gave a much-appreciated boost to shares, as analysts believe increasing demands for Blackmores’ products could help benefit its share value, as the severe flu season hits Australia.

But investors should keep in mind that Blackmores’ shares have been facing added tension in sales for most of FY2019.

Sales to Chinese consumers in Australia or directly to China have sunk a total of 6% for the quarter ending 31 March 2019.

Which could have something to do with new Chinese Counterfeits entering the market, which are increasingly hard to distinguish from Blackmores’ own products.

To combat this, Blackmores is putting near field communications chips in its infant formula cans as a way to positively identify the product.

Although impacting sales, the copying of Blackmores products could also be an indicator of how well the company is preforming — as other competitors seek to emulate.

However, other countries in Asia have seen strong sale growth. According to Yahoo Finance, Hong Kong is up 18%, Malaysia 32% and Indonesia a staggering 99%.

Blackmore’s 2019 share price outlook

When it comes to Blackmores’ core business in Australia and New Zealand, things are going pretty well.

Sales from the financial year as at 31 March 2019 are leading 3% with overall sales increased by 6%.

But, last month Blackmores announced it had a 43% fall in profit over the last three months to $10 million, as reported by The Sydney Morning Herald.

Revenue dropped by 4%, as a result of sliding sales in China.

We’ll be watching this space closely for any further developments.


Ryan Clarkson-Ledward,
For Money Morning

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