UPDATE: Morgan Stanley Reiterates Overweight Rating, Raises PT on Colgate-Palmolive Company Following Solid Q1 EPS

In a report published Monday, Morgan Stanley analyst Dara Mohsenian reiterated an Overweight rating on Colgate-Palmolive Company CL, and raised the price target from $70.00 to $73.00. In the report, Morgan Stanley noted, “CL Q1 EPS was in-line with consensus, with sales, gross, and oper. profit all within 1% of consensus. Organic sales growth was strong at +6.5%, above the 5.9% consensus, with two-yr avg. growth of +6.3% above +5.5% in H2 of 2013. Pricing was solid at +1.5%, sequentially improving from a flat Q4 result. However, gross margins were 50 bps below consensus (confirming our concerns that CL's prior guidance was too high), leading to in-line profit. Emerging markets organic sales growth of +10% was strong on a y-o-y/2-yr avg. basis, both in line with 2013, although CL indicated EM category growth slowed to 5-7% from 6-8%. Post-strong Q1 EPS, we are raising our EPS by 1% (1% above CL guidance) and our price target by 4% to $73. We remain OW with stronger CL organic sales growth and FX neutral EPS growth than peers. We believe CL offers investors a solid low-teens annual return with 11% long-term FX neutral EPS growth and a 2% div. yield, but do not expect multiple expansion with CL's 16% P/E premium vs. peers.” Colgate-Palmolive Company closed on Friday at $66.24.