Analysts remain on sidelines
Kimberly-Clark (KMB) failed to impress with its fourth-quarter performance. Its healthy performance on the organic sales front was positive. However, weak margins and the lower EPS growth rate didn’t sit well with investors. Following its fourth-quarter results, J.P. Morgan lowered its target price on Kimberly-Clark stock to $120 per share from $129.
Kimberly-Clark’s top line is projected to remain weak in 2019 as currency volatility is expected to take a toll on it. Organic sales are projected to improve, driven by higher pricing. However, increased pricing amid heightened competition could hurt volumes. Meanwhile, business remains weak in China, which is a concern.
Its margins could continue to take a hit from higher commodity costs. However, increased pricing and cost-saving measures are expected to support margins. Kimberly-Clark’s bottom line faces significant headwinds from the higher tax rate in 2019, which could result in lower EPS.
Rating and consensus target price
Of the 18 analysts covering the stock, 12 analysts recommend a “hold,” five analysts suggest a “sell,” and one analyst has a “buy” rating on KMB stock. Meanwhile, analysts have a consensus target price of $106.56 per share on KMB, which implies a downside of 5.0% based on its closing price of $112.15 on January 23.