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On Monday, Wells Fargo (NYSE:WFC) analyst Chris Carey adjusted the price target for Church & Dwight Co. Inc. (NYSE:CHD) stock to $165 from the previous $168 while maintaining an Overweight rating. The revision comes in the wake of the company’s recent performance since the grand opening of Rose™s Gaming Resort on November 7th. Church & Dwight’s shares have dropped by 17%, a stark contrast to the average 2% decline of its U.S. Gaming peers and the S&P 500’s 1% gain.
Carey attributes the decline primarily to what he perceives as an investor overreaction to the slow start of Rose™s Gaming Resort, combined with concerns about potential new competition in Northern Virginia. According to InvestingPro’s Financial Health assessment, Church & Dwight maintains a "GOOD" overall score of 2.78, with particularly strong marks in profitability. This competition still faces several hurdles, including approval by the House of Delegates, a signature from the Governor, and passing a referendum.
The analyst notes that the market has devalued Church & Dwight by approximately $1.8 billion, which equates to 20 times the $90 million of fully ramped Rose EBITDA. The stock is currently trading at 11 times its projected 2025 enterprise value to EBITDA, which is 1.3 times below its historical average of 12.4 times. Despite the recent underperformance, Wells Fargo anticipates improved performance in the upcoming spring season as Rose™s Gaming Resort resolves its initial operational issues and the momentum from the Derby season kicks in.
Church & Dwight’s performance in the second quarter historically outperforms its peers, with an average increase of 12% compared to the peers’ average decrease of 4%. Despite the challenging start for Rose™s Gaming Resort, with December gross gaming revenue (GGR) down by 11% month-on-month and January visitation falling by 11% from December, the analyst remains positive. The slower-than-expected start has been attributed to various factors, including minimal pre-marketing, initial operational challenges, the timing of the opening, successes of the Washington Commanders, and traffic congestion.
In other recent news, Church & Dwight Co., Inc. reported fourth quarter earnings that aligned with analyst expectations, while revenue slightly surpassed estimates. The company anticipates 2025 organic sales growth of 3-4% and adjusted earnings per share growth of 7-8%. However, the first quarter guidance came in below expectations, with the company forecasting adjusted EPS of $0.90, a 6% year-over-year decline.
Simultaneously, Piper Sandler, Stifel, and Barclays (LON:BARC) have revised their price targets for Church & Dwight. Piper Sandler reduced its price target from $128 to $126, maintaining an Overweight rating, while Stifel raised its target to $105 from $103, keeping a Hold rating. Barclays also increased its price target from $90 to $93, yet maintained an Underweight rating.
These recent developments underscore Church & Dwight’s mixed performance and varying analyst expectations. Despite potential challenges, Piper Sandler remains confident in the company’s management and its growing international business. Stifel acknowledges the company’s consistent performance and adaptability, while Barclays expresses concerns over the company’s Evergreen OSG target.
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