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UBS Keeps Colgate-Palmolive (CL) at 'Buy', Trims PT to $73 on Tough Market Conditions

September 15, 2014 11:30 AM EDT
Get Alerts CL Hot Sheet
Price: $89.95 +1.18%

Rating Summary:
    18 Buy, 12 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 6 | Down: 3 | New: 1
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UBS moves its price target on Colgate-Palmolive (NYSE: CL) from $77 to $73, but maintains a Buy rating on the stock.

Analyst Stephen Powers commented, Over the past 2+ months, CL has traded down -8% relative to the S&P on the back of weak Q2 performance, lowered guidance, a rekindling of the triclosan health debate (active ingredient in Colgate Total), and a lack of good news out of key markets such as Brazil, Venezuela, and China (counter to CL hopes exiting Q2). We too have lowered our expectations—primarily driven by the strong dollar and weaker emerging market macros—and have accordingly revised our estimates downwards (+3.5% 2015 all-in top-line growth, +5.6% organic, +8.0% EPS growth vs. +4.8%, +6.5%, +9.9% prior).

Despite these revisions (which we expect consensus to follow), we remain buyers of CL. We believe these more cautious expectations to be already priced into the stock, and note Colgate has a history of delivering strongly on revised expectations following a pullback—on average CL's share price has improved by ~+12% relative to the S&P in the 12 months following such adjustments (e.g., in 2004, 2008, 2010). Moreover, we see ample evidence that triclosan headwinds (a valid risk, to be clear) remain more muted than feared. We note that search interest for the term "triclosan" peaked and quickly fell off around the time of the most recent news reports, and based on Nielsen data, consumer buying patterns have seen little change in the weeks that followed.

For an analyst ratings summary and ratings history on Colgate-Palmolive Company click here. For more ratings news on Colgate-Palmolive Company click here.

Colgate-Palmolive Company closed at $64.48 yesterday.



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