On Thursday, Jefferies maintained its Hold rating on Colgate-Palmolive Company (NYSE:CL) with a steady price target of $101.00. The firm anticipates a slight dip in earnings per share (EPS) ahead of the company's third-quarter results, citing a projected 2 cents drop below consensus due to reduced volume from Hill's, a subsidiary of Colgate, stemming from lower capacity utilization in the near term.
The firm forecasts that for the full year, Colgate-Palmolive is expected to confirm its previously stated targets of 6-8% organic sales growth and 8-11% EPS growth. The analyst noted that the company's fundamentals remain robust.
Despite the strong fundamentals, the firm pointed out that the current stock valuation, which is 26 times the next twelve months' (NTM) projected earnings, is high. This valuation suggests that investors are expecting high single-digit percentage organic sales and greater than 10% EPS compound annual growth rates (CAGRs) through 2026.
The analyst's commentary underscored the soundness of Colgate's business fundamentals but indicated that the market's current expectations for future growth are reflected in the stock's valuation. The $101 price target was reiterated while maintaining the Hold rating on the company's stock.
In other recent news, Colgate-Palmolive has been the subject of various analyst notes following their strong second quarter of 2024 performance. Deutsche Bank maintained a Hold rating on the company, projecting third-quarter organic growth of 7.1% and earnings per share (EPS) of $0.89. The firm also expects Colgate-Palmolive to reaffirm its full-year guidance, which includes 6%-8% organic growth and an EPS range of $3.49 to $3.59.
Piper Sandler initiated coverage on Colgate-Palmolive with an Overweight rating and a price target of $121, recognizing the company's transition to a more normalized growth profile. In contrast, Wells Fargo downgraded Colgate-Palmolive from Equal Weight to Underweight, citing potential modest downside potential and a possible reversion in the company's toothpaste market share.
TD Cowen increased its price target on Colgate-Palmolive to $115 and revised its EPS growth estimate for the company upward to 11.1%. Jefferies also increased its price target for the company to $101, albeit with caution regarding the sustainability of the company's performance. Evercore ISI maintained an Outperform rating and raised the price target from $106 to $112, highlighting Colgate's strong growth prospects.
InvestingPro Insights
Colgate-Palmolive's financial metrics and market performance align closely with Jefferies' analysis. According to InvestingPro data, the company's P/E ratio stands at 28.94, which is consistent with the high valuation noted by Jefferies. This valuation is further supported by Colgate's impressive gross profit margin of 59.7% for the last twelve months as of Q2 2024, reflecting the company's strong fundamentals.
InvestingPro Tips highlight Colgate-Palmolive's consistent dividend performance, having raised its dividend for 35 consecutive years and maintained payments for 54 years. This track record underscores the company's financial stability and commitment to shareholder returns, which may justify its premium valuation.
The company's revenue growth of 7.03% over the last twelve months aligns with Jefferies' projection of 6-8% organic sales growth. Additionally, the PEG ratio of 0.32 suggests that the stock may be undervalued relative to its growth prospects, potentially offering a counterpoint to concerns about high valuation.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Colgate-Palmolive, providing deeper insights into the company's financial health and market position.
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