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On Wednesday, RBC Capital Markets adjusted their outlook on Kimberly Clark shares (NYSE:KMB), reducing the price target from $165.00 to $162.00, while still maintaining an Outperform rating on the stock. According to InvestingPro data, the company currently trades at a P/E ratio of 18.2x and shows signs of being slightly undervalued based on its Fair Value analysis. The adjustment follows Kimberly Clark’s recent financial performance, where the company experienced a top-line miss, yet managed to meet margin expectations and exceed earnings per share (EPS) projections.
The analysis by RBC Capital attributes Kimberly Clark’s ability to surpass EPS expectations to the effectiveness of the company’s new operating model. Despite the lower revenue, the company’s profit margins stayed consistent, which RBC Capital views as a positive sign of the company’s operational strength. InvestingPro data shows the company maintains a healthy gross profit margin of 36.5% and has achieved an impressive Piotroski Score of 8, indicating strong financial health. The company has also maintained its position as a reliable dividend payer, having raised dividends for 52 consecutive years.
Kimberly Clark has also revised its guidance downward, primarily due to a $300 million cost of goods sold (COGS) headwind. This challenge is a result of U.S. tariffs and subsequent retaliatory measures, which have impacted the company’s cost structure. However, Kimberly Clark has a mitigation strategy in place, intending to maintain investments in the business while navigating these economic pressures.
The company is optimistic that it can alleviate the impact of tariffs through network optimization, although this process is expected to take a few quarters. RBC Capital has adjusted their financial year 2025 estimates for Kimberly Clark accordingly, which led to the new price target of $162.00. Despite this reduction, the new target still suggests a nearly 20% upside potential for the stock, signaling RBC Capital’s continued confidence in Kimberly Clark’s performance. With a current dividend yield of 3.65% and a moderate debt level, the company maintains strong fundamentals. For deeper insights into KMB’s valuation and financial health metrics, including 8 additional ProTips and comprehensive analysis, check out the full research report available on InvestingPro.
In other recent news, Kimberly-Clark Corporation reported its first-quarter earnings for 2025, revealing a mixed performance. The company slightly exceeded expectations on earnings per share (EPS), reporting $1.93 against a forecast of $1.90. However, revenue fell short of projections, coming in at $4.84 billion compared to the anticipated $4.88 billion. This revenue shortfall, along with revised guidance for flat EPS growth for the year, reflects ongoing challenges for the company. Kimberly-Clark has also adjusted its full-year EPS guidance to flat growth, down from a previously anticipated increase of 6.5%. The company faces a significant financial impact from tariffs, projected to cost $300 million gross, primarily due to U.S.-China tariffs. Despite these challenges, Kimberly-Clark remains focused on product differentiation and innovation, particularly within its personal care segment, to maintain its competitive position. Analysts from firms like Barclays (LON:BARC) and Morgan Stanley (NYSE:MS) have raised concerns regarding the company’s strategies to mitigate these costs and the impact on future growth.
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