Macquarie Upgrades Church & Dwight After Beat-and-Raise Quarter

Household goods manufacturer Church & Dwight Co., Inc. CHD's first-quarter print showed 14.7-percent sales growth and 24-percent EPS growth, and the company raised its full-year sales outlook.

The Analyst

Macquarie analyst Caroline Levy upgraded Church & Dwight from Neutral to Outperform and increased the price target from $50 to $55.

The Thesis

Church & Dwight's more than 3-percent organic sales growth and double-digit EPS growth come at a time when other household consumer product names are hardly growing at all, Levy said in a Monday note. 

The strong Q1 is a demonstration of superior branding and execution and a function of tight management team and focused, streamlined business model, the analyst said. The company's leading brands are driving above-average sales growth, she said. 

Growing at two times the rate of domestic growth, Church & Dwight's international business continues to deliver upside, Levy said. 

"Based on CHD's focus on growing the consumer international unit, we believe that a new personal care category in a key emerging market could be of interest."  

Macquarie maintained its calendar 2018 earnings per share estimate and increased its calendar 2019 estimate by 6 cents to $2.50.

CHD's premium should expand as its diversified portfolio delivers above-peer average three-year organic sales and EPS growth of 3 percent in 2018 and 10 percent in 2019-20, Levy said. 

The Price Action

Church & Dwight shares have lost 5.21 percent year-to-date.

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Photo via Wikimedia.