Barclays Is Upgrading Kimberly-Clark, Notes 'Sustainable Improvement'

In a report published Wednesday, Barclays analysts upgraded the rating on

from Equal-Weight to Overweight, while raising the price target from $122 to $124. In the report Barclays noted, "With organic sales growth pacing in-line to slightly better than the HPC peer group and earnings growth that no longer looks more volatile or slower than that of this group, Kimberly-Clark's business performance has come to mirror that of its peers over the past 2 years." The company has taken initiatives to shift its portfolio away from Consumer Tissue and towards higher growth and higher margin opportunities like the Personal Care businesses. Moreover, Kimberly-Clark's business has less exposure to the developed markets than it had a decade back, with the company exiting the Western European diaper market in 2012 and increasing its focus on the emerging markets, which now constitutes 33 percent of total sales, as compared to about 14 percent in the mid-2000s. "KMB has undertaken 3 major restructuring initiatives over the last decade, each of which has contributed towards margin expansion," the analysts commented. Despite all these positives, the stock's relative valuation has not "changed much" and the stock is currently trading at a "sizeable discount," which offers an "investment opportunity," the analysts added.