Goldman Sachs Lifts PTs Across the Board on Consumer Staples as 10-Year Yield Plummets (MNST) (STZ) (PF)

Goldman Sachs raised price targets across consumer staples to reflect the decline in 10-year yields to to 1.43% from around 1.7% pre the Brexit vote. This dreives Staples absolute NTM P/E up to 23.7X and relative P/E premium to ~40% vs. the S&P P/E. "We raise our average Staples target multiples to 20-22X P/E, up from the 19-20X range prior, to reflect the recent decline in 10-year yield as well as some likelihood of a slower rise in yield over the next 12 months and broader market volatility," analysts led by Judy E. Hong said.

Top picks in the sector include: Monster Beverage (NASDAQ: MNST), Constellation Brands (NYSE: STZ), Pinnacle Foods (NYSE: PF) and Post Holdings (NYSE: POST). MNST (CL-Buy) and STZ (Buy) on idiosyncratic growth with comparably higher domestic “safe haven” exposure, and POST (Buy) and PF (Buy) for relative value in Staples with M&A related catalyst optionality.

Sell-rated names include: Brown-Forman (NYSE: BF-B), Church & Dwight (NYSE: CHD) and J. M. Smucker (NYSE: SJM). For CHD and BF_B they note increased competition in core categories as a fundamental risk to estimates (laundry for CHD; whisky for BF-B) and highlight dissipation of transitory benefits at SJM (coffee costs; distribution gains).

New Price Targets:

• Pinnacle Foods (NYSE: PF) (Buy) - New PT $57, up from $48.
• Kimberly-Clark Corp. (NYSE: KMB) (CL Buy) - New PT $156, up from $152.
• Kraft Heinz Co. (NYSE: KHC) (CL Buy) - New PT $98, up from $93
• Estee Lauder Cos. (NYSE: EL) (Neutral) - New PT $100, up from $98.
• Reynolds American Inc. (NYSE: RAI) (Buy) - New PT $57, up from $55
• Mead Johnson Nutrition Co. (NYSE: MJN) (Neutral) - New PT $96, up from $91
• Edgewell Personal Care (NYSE: EPC) (Neutral) - New PT $93, up from $88
• Procter & Gamble Co. (NYSE: PG) (Neutral) - New PT $88, up from $81
• Colgate-Palmolive Co.(NYSE: CL) (Neutral) - New PT $76, up from $74
• Campbell Soup Co. (NYSE: CPB) - New PT $68, up from $62
• Energizer Holdings (NYSE: ENR) - (Neutral) - New PT $52, up from $50
• Philip Morris International (NYSE: PM) (Neutral) - New PT $105, up from $99
• Coca-Cola (NYSE: KO) (Buy) - New PT $46, up from $45.
• Altria Group (NYSE: MO) (Neutral) - New PT $69, up from $64
• Dr Pepper Snapple Group (NYSE: DPS) (Sell) - New PT $95, up from $89
• Freshpet Inc.(NASDAQ: FRPT) (Neutral) - New PT $10, up from $9
• Clorox Co.(NYSE: CLX) (Neutral) - New PT $131, up from $125
• Hershey Co. (NYSE: HSY) (Neutral) - New PT $99, up from $89
• J. M. Smucker Co.(NYSE: SJM) (Sell) - New PT $131, up from $128
• General Mills (NYSE: GIS) (Sell) - New PT $61, up from $60
• Church & Dwight Co.(NYSE: CHD) (Sell) - New PT $84, up from $81

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