Barclays Hikes Targets On U.S. Cosmetics Companies: What You Should Know

Barclays’ Lauren R. Lieberman revised the price targets for several cosmetics companies. Money flows into the Staples sector had lifted valuation multiples since the beginning of 2016, the analyst said. She added, “While we aren’t ones to chase the market, with such a broad elevation in absolute valuation levels, we are revisiting our price targets given our directive to consider our stocks in a relative context.”

Clorox

Clorox Co CLX – Underweight rating maintained, price target reduced from $112 to $120

“We are raising our price target on CLX shares to $120 which reflects a ~24x multiple on our C16 EPS estimate of $4.97 and assumes CLX trades in line with Large-Cap CHPC. Our previous price target of $112 assumed CLX traded at a ~22x multiple on our C16 EPS estimate in line with trading peers at the time,” analyst Lauren Lieberman wrote.

Estee Lauder

Estee Lauder Companies Inc EL – Overweight maintained, price target raised from $94 to $104

On an absolute basis, the company’s shares have not traded above 30x since the early 2000s. Lieberman said, however, that on a relative basis a +30 percent premium has been assigned to “where Large-Cap CHPC is currently trading, which is in line with history.”

Kimberly Clark

Kimberly Clark Corp KMB – Overweight maintained, price target raised from $132 to $149

The current price target reflects a ~24x multiple on the EPS estimate of $6.19 for 2016 and assumes the company’s shares trade in-line with Large-Cap CHPC peers. “Our previous price target of $132 reflected the same relative valuation and earnings power, albeit with the group trading at lower levels,” the analyst said.

Colgate-Palmolive

Colgate-Palmolive Company CL – Equal-weight maintained, price target raised from $69 to $70

The current price target reflects a 25.5x multiple on the EPS estimate of $2.73 for 2016 and assumes the shares trades at a mid-single-digit premium to Large-Cap CHPC.

Procter & Gamble

Procter & Gamble Co PG – Equal-weight maintained, price target raised from $79 to $82

The current price target reflects a 22.5x multiple on the EPS estimate of $3.66 for 2016 and assumes the company’s shares trade at a mid-single-digit discount to Large-Cap CHPC. “We note that our FY17 EPS estimate is $0.22/sh below current Consensus. Our C2016 estimate is $0.15/sh below Consensus,” the Citi report mentioned.