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Buy Oriflame Cosmetics

Analyst Stefan Lycke of Deutsche Bank upgrades Oriflame Cosmetics (OFC.ETR) from "hold" to "buy." The target price is set to SEK260.

In a research note published this morning, the analyst mentions that the company's robust operational performance is expected to continue in Q2, in view of the healthy performance of products and catalogues.

Oriflame Cosmetics is expected to be able to reduce its inventory level by nearly one-third, which is likely to boost cash flows and reduce markdowns and warehouse costs, the analyst says. The upgrade in the rating partly reflects the recent weakness in the company's share price, Deutsche Bank adds.