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On Monday, TD Cowen maintained a positive outlook on Colgate-Palmolive Company (NYSE:CL) shares, reiterating a Buy rating and a price target of $100.00. The firm’s stance comes after observing the company’s fourth-quarter gross margin expansion, which, at 70 basis points (bps), was significantly lower than the 290 bps expansion seen in the previous three quarters. Despite the slowdown, InvestingPro data shows the company maintains impressive gross profit margins of 60.6%. The slower growth was attributed to the impact of transactional foreign exchange (FX) effects, which amplified cost inflation and resulted in a 360 bps headwind.
Colgate-Palmolive has initiated pricing actions in the first quarter within Latin America and Africa to begin counteracting this FX pressure. With the stock currently trading at $87.03, InvestingPro analysis suggests the company is slightly overvalued at current levels. The company anticipates that gross margin expansion in the fiscal year 2025 will be driven by revenue growth management and productivity gains.
Despite the optimism, TD Cowen also acknowledged the potential downside risks to the company’s guidance, particularly if tariffs start to influence financial outcomes. The firm’s analysis points to a cautious but hopeful view of Colgate-Palmolive’s ability to navigate through the current economic challenges, with strategic pricing and productivity improvements positioned as key factors in the company’s financial performance moving forward. InvestingPro subscribers can access 8 additional key insights about Colgate-Palmolive, including crucial financial health metrics and dividend stability analysis.
In other recent news, Colgate-Palmolive announced mixed fourth-quarter financial results and projections for 2025, which led to Stifel cutting the company’s stock price target to $93 from $95, while maintaining a Hold rating. The company reported earnings per share of $0.91 and generated $20.1 billion in revenue over the past year. However, the organic sales growth of 4.3% fell short of the anticipated ~6%, suggesting a slowdown in the first half of 2025. On the other hand, the company’s Hill’s pet nutrition brand experienced significant growth of 25% in the fourth quarter of 2024.
Barclays (LON:BARC) reiterated an Equalweight rating on Colgate-Palmolive with a steady price target of $83, while Raymond (NSE:RYMD) James reduced its price target for the company to $105, maintaining an Outperform rating. These changes in ratings and price targets were influenced by the company’s recent sales performance and future projections.
In response to anticipated foreign exchange headwinds and a slowdown in certain global markets, Colgate-Palmolive announced it would implement pricing adjustments in Latin America starting in the first quarter. Despite these challenges, analysts from Raymond James, Stifel, and Deutsche Bank (ETR:DBKGn) maintain confidence in the company’s strategic positioning and its potential for sustained growth.
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