Goldman Sachs Cuts Colgate-Palmolive To Sell

In a report published Monday, Goldman Sachs analysts downgraded

from Neutral to Sell. The price target has also been reduced from $71 to $64. Investors might be underestimating the company's Fx exposure and the concomitant impact on its margins. Colgate-Palmolive is vulnerable to second-derivative risks of increased competition from European as well as local/regional rivals, which could limit its pricing power outside Latin America. While the risk is not very different from that being faced by many of its peers, Colgate-Palmolive has been outperforming others, "setting it up, in our opinion, for relative underperformance," the analysts said. In addition, Goldman Sachs also believes that there is the potential risk of

becoming a more daunting competitor in the oral care segment, once it has completed restructuring its portfolio to a more focused one. The company is scheduled to report its 1Q15 results on April 30. "Despite robust organic sales expectations (+6%), we see risk of a modest EPS shortfall as FX transaction headwinds pressure gross margins. We also expect the firm to lower its FY15 guidance of low-single-digit EPS growth with FX headwinds to low-single-digit EPS declines also with FX headwinds," Goldman Sachs adds.