Morgan Stanley Sees Improved Trends Ahead for Colgate-Palmolive Company

In a report published Monday, Morgan Stanley analyst Dara Mohsenian reiterated an Overweight rating and $71.00 price target on Colgate-Palmolive Company (NYSE: CL).In the report, Morgan Stanley noted, “CL Q3 adj. EPS of $0.76 was in-line with the $0.76 consensus, but the quality of Q3 was weak with organic sales growth of +3.5%, -110 bps below the +4.6% consensus, and a 90 bp gross margin miss, leading to -2.8% gross profit downside. This was partially offset by SG&A, resulting in a -2.1% oper. profit miss. Ad spend was -10.5% y-o-y, adding 6% to profit vs. our forecast. Emerging markets org. sales growth slowed to +4.5% from +6.5% in Q2 and the 9-10% range in Q1/FY13. While Q3 quality was poor, bullish CL commentary on the call that China and Brazil retail consumption had rebounded towards the end of Q3 highlights that trends should improve going forward, including CL guidance of +4-7% org. sales growth in 2015 and +DD local FX EPS growth.”Colgate-Palmolive Company closed on Friday at $65.35.