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Goldman Sachs Upgraded Colgate-Palmolive Stock

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Jan. 10 2019, Updated 8:04 a.m. ET

Goldman Sachs expects organic sales to improve

On January 9, Goldman Sachs upgraded Colgate-Palmolive (CL) stock to “buy” from “hold” and raised the target price to $74 per share from $63 per share. Goldman Sachs expects Colgate-Palmolive’s organic sales to accelerate sequentially.

However, we think that the company’s top and bottom-line performance could continue to disappoint investors, at least in the first half of 2019. Analysts expect Colgate-Palmolive’s top line to decline in the coming quarters, which reflects the negative currency rate and soft volumes. The company’s organic sales could benefit from higher net pricing.

Colgate-Palmolive’s bottom line is expected to remain weak and decline on a YoY (year-over-year) basis in the coming quarters. Soft sales and pressure on the margins due to increased packaging, raw material, and shipping costs will likely impact Colgate-Palmolive.

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Analysts’ recommendations

Most of the analysts providing ratings on Colgate-Palmolive stock maintained a “neutral” outlook. Analysts expect sales and margin headwinds to continue to restrict the upside in the stock. Among the 21 analysts following Colgate-Palmolive stock, 14 recommended a “hold,” five recommended a “buy,” and two recommended a “sell.” Analysts have a consensus target price of $63.48 per share on Colgate-Palmolive stock, which implies an upside of 3.6%

Analysts have maintained a neutral outlook on other major household and personal care product manufacturers including Procter & Gamble (PG), Clorox (CLX), Kimberly-Clark (KMB), and Church & Dwight (CHD).

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