Next Year Will Be Weak For Kimberly Clark; Analyst Says Buy The Stock Anyway

As such, the firm upgraded shares of Kimberly Clark from Neutral to Overweight, while it maintains its $128 price target.

Analyst April Scee said growth is unlikely to return to long-term target in 2018, with the organic growth in 2018 expected to be the third year the company falls below the 3-5 percent long-term target.

The analyst noted that the personal care segment is pressured by slower category growth, as birth rates remain low, and increased competition, especially from Procter & Gamble Co PG.

The analyst remarked that this segment was Kimberly Clark's growth engine in eighteen quarters, prior to the slowdown in the second-half of 2016. With the growth engine stuttering, the analyst expects the company to struggle to hit the 3 percent, plus, organic growth target (see Scee's track record here).

Renaissance said it is slightly below consensus.

That said, the firm sees Northern American personal care improving in the fourth quarter, given an increased promotion and brand activity. Therefore, the firm said September quarter could be the bottom for this segment.

The firm expects the consumer tissue segment, which returned to positive organic growth in the September quarter in North America, to continue to improve. Additionally, the firm expects the company to continue to execute well in KC-P organic, which saw the best performance since December 2015.

Citing the company's adeptness in cutting cost, the firm said the company will continue to guide for modest margin expansion, even as commodities are likely to remain a drag in 2018.

"We model 20bp in 2018 and 2019, but the bias could be upward if Kimberly is able to take pricing to cover inflation or if it announces a new restructuring program," the firm added.