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Kimberly-Clark Stock: Headwinds Could Stall the Uptrend


Dec. 4 2020, Updated 10:53 a.m. ET

Kimberly-Clark stock rose 10.6%

Kimberly-Clark (KMB) stock showed a decent recovery in November and increased 10.6% due to the company’s stronger-than-expected third-quarter financial performance. Kimberly-Clark’s higher pricing, improved mix, and a considerable decline in the effective tax rate helped the company report better-than-expected financials. Kimberly-Clark’s peers also recorded a healthy recovery in their stock prices in November.

However, the recovery in Kimberly-Clark stock might not last long. Persisting sales and margin headwinds are expected to hurt the company’s financials and stock price.

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Near-term headwinds  

Analysts expect Kimberly-Clark’s sales and margins to remain weak in the near term. Kimberly-Clark’s top line is projected to decline in the fourth quarter and the first quarter of 2019. Challenging market conditions in China, negative currency rates, and increased competition in the value segment will likely hurt the company’s sales. Kimberly-Clark’s first quarter faces a tough YoY comparison.

Kimberly-Clark’s margins are also projected to remain weak. Continued inflation in commodities and other raw material prices will likely remain a drag. Increased transportation costs are expected to hurt the company’s margins. Management expects its 2019 tax rate to be higher than the rate in 2018, which will likely lower the earnings growth rate.

Among the 18 analysts covering Kimberly-Clark stock, 13 recommended a “hold,” while five recommended a “buy.” Analysts have a consensus target price of $105.65 per share on Kimberly-Clark, which indicates a downside of 6.1% based on its closing price of $112.51 on December 4.


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