Market Overview

Kimberly Clark Catches A Downgrade Ahead Of A 'Double Hazard'

Share:
Kimberly Clark Catches A Downgrade Ahead Of A 'Double Hazard'

Amid heightened competition, rising costs of raw materials, and a weak selling environment, Kimberly Clark Corp (NYSE: KMB) lost the confidence of JPMorgan.

Analysts expect margin pressures and decelerating revenue to cripple the firm’s earnings power potential and thus issued a 2018 earnings per share estimate of $6.09 against management guidance between $6.20 and $6.35.

What’s Going Wrong?

Kimberly Clark is conceding U.S. market share in most product categories, and with retailers opting for more affordable private labels and rival Procter & Gamble Co (NYSE: PG) attempting to prove itself under activist-investor pressures, competition is likely to intensify.

At the same time, the firm continues to struggle in international markets, particularly with a recent Procter & Gamble product launch in China.

“We believe soft top-line trends will be exacerbated by cost pressure from rising pulp and resin prices,” analysts Andrea Teixeira, Christina Brathwaite and Peter Grom wrote in a Friday note. “Input cost inflation will likely more than offset cost reduction efforts via the FORCE program, in our view.”

The Bottom Line

JPMorgan downgraded Kimberly Clark to Underweight and lowered its price target from $135 to $100, noting thesis risk in the potential for large-scale private label contracts with the likes of Amazon.com, Inc. (NASDAQ: AMZN).

At time of publication, shares were trading down 1.8 percent at a rate of $113.49.

Related Links:

Analyst Fights The Temptation To Sell Kimberly Clark

Lightning Round: Jim Cramer Shares His Thoughts On Alibaba, Kimberly Clark And More

____
Image Credit: I, BrokenSphere [GFDL (http://www.gnu.org/copyleft/fdl.html), CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/) or CC BY-SA 2.5-2.0-1.0 (https://creativecommons.org/licenses/by-sa/2.5-2.0-1.0)], via Wikimedia Commons

Latest Ratings for AMZN

DateFirmActionFromTo
Apr 2019MaintainsOutperformOutperform
Apr 2019MaintainsOverweightOverweight
Apr 2019MaintainsBuyBuy

View More Analyst Ratings for AMZN
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings News Guidance Short Ideas Downgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (AMZN + KMB)

View Comments and Join the Discussion!

The Model 3, Cash Burn And Autonomous Tech: What To Listen For On Tesla's Q3 Call

The Easy Money Has Already Been Made In HP Enterprise