E&P Capital downgrades Ansell on 'macro headwinds'
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The news: E&P Capital analysts downgraded Ansell from 'neutral' to 'negative', warning that the personal protective equipment (PPE) manufacturer faces persistent "macro headwinds".
The numbers: Ansell shares dipped 0.4% to $25.98 by 1:00pm AEST and over the last 12 months have fallen 3.6%. The analysts valued the company at $24.5 per share.
The context: E&P analysts said the macro headwinds included a weaker US industrial market, increased raw material prices, and European supply chain issues due to conflict in the Red Sea.
They noted distributors had called out a "broad macro weakness" in the US and that it was unlikely to see a sharp recovery before the end of 2024.
Elsewhere, the analysts warned that supply issues due to conflict in the Red Sea were weighing on Ansell's earnings, with the European surgical market yet to fully recover from destocking issues in the first half.
Increases in raw material prices, meanwhile, may not effect FY24 earnings, but may put FY25 earnings at risk.
The analysts also said that while they were positive on the long-term opportunity of its recent acquisition of Kimberly-Clark's PPE business, the short term remained "uncertain" and execution risk of the acquisition remained.
The source: E&P Capital research
