Colgate-Palmolive (NYSE:CL) shares are up almost 1% premarket after BofA upgraded the stock to Buy from Neutral, raising the price target from $75 to $90 per share.
Analysts told clients in a research note that the company's sales and margin inflection should reassure investors of its earnings per share delivery.
The investment bank raised its FY24 and FY25 EPS estimates for the company from $3.38 and $3.66 to $3.48 and $3.76, respectively. It now factors in +4.5% year-over-year organic sales growth for FY24, up from +3.6% prior.
"We expect sales and EPS revision potential to drive share price differentiation in our Consumer Staples coverage universe in 2024," analysts said. "In our view, CL holds potential to grow above its long-term targets over the next 12 months, which should serve as a catalyst for the stock."
Analysts noted that key drivers behind the potential for sales and EPS upside in FY24 are US volume and market share turning positive, emerging markets growth being above average, and margin expansion as price continues to keep up with costs.