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Investing.com -- Evercore ISI downgraded Kimberly-Clark to In Line from Outperform, saying the company’s bold strategic shift fundamentally changes its risk profile and earnings outlook.
The brokerage said Kimberly’s acquisition of Kenvue assets marks a “story change,” moving the firm from a low-risk restructuring to one with higher execution complexity and exposure to new competitive markets.
Evercore said its preliminary 2027–28 earnings forecasts show limited upside relative to consensus, making the stock’s risk-reward less compelling.
Analysts highlighted four main concerns: Kimberly’s limited experience in Kenvue’s product categories, tougher competition from faster-reinvesting peers such as L’Oréal and Colgate, management distraction amid ongoing restructuring and divestitures, and headline risks tied to potential Tylenol-related liabilities.
Evercore also noted positives for long-term investors as Kimberly’s decentralized operating model could help manage execution risk, while revenue synergies in feminine and baby care categories appear credible.
The combined company’s scale could yield conservative cost synergies, though reinvestment may need to rise to stay competitive.
Evercore also said Kimberly’s move expands its footprint into two stable, cash-generative global categories, personal hygiene and consumer health, that have high barriers to entry and rational pricing. However, it warned that valuation may remain capped until liability concerns are resolved.
The analysts expect more industry consolidation as consumer goods companies seek operating leverage and efficiency through mergers. They also see increased competition in key emerging markets such as India, Indonesia and Brazil once Kimberly’s integration is complete.
Evercore said if Kimberly successfully stabilizes Kenvue’s businesses and simplifies operations, the stock could eventually re-rate toward peers like Colgate and Procter & Gamble.