Market Overview

Higher Prices At Kimberly Clark Are Behind JPMorgan's Higher Rating

Share:
Higher Prices At Kimberly Clark Are Behind JPMorgan's Higher Rating
Related KMB
Pot Stocks, ETFs, Top News And Data From The Cannabis Industry This Week
Tug-of-War: Volatile October Continues As Bulls, Bears Duke It Out
Top 'Safer' Dividend Aristocrats Are G. Dynamics; Chevron; Nucor; VF; Lowe's; Per December Targets (Seeking Alpha)

Kimberly Clark Corp (NYSE: KMB)'s announcement that it's raising prices on a host of key items in North America triggered a sell-side upgrade Thursday. 

The Analyst 

JPMorgan analyst Andrea Teixeira upgraded Kimberly Clark from Underweight to Neutral and raised the price target from $90 to $114.

The Thesis

Teixeira estimates that Kimberly Clark’s price increases will apply to roughly 50 percent of its North American personal care business and 85 percent of consumer tissue and take effect in the fourth quarter. (See the analyst's track record here.)

“While it remains to be seen if these price increases will actually hold given the intensely competitive U.S. market, we believe that investors will give KMB shares the benefit of the doubt and that the recent 3x multiple turn rerating that its shares have experienced since early June will likely hold, with the perception that they are turning the corner from the worst,” the analyst said. 

Kimberly Clark said it will raise prices by the mid-single digits to high-single digits on average on Cottonelle, Scott 1000, Kleenex, Viva, Huggies, Pull-Ups and GoodNites.

Competitor Procter & Gamble Co (NYSE: PG)'s recent commentary that it plans to raise prices on some of its premium paper products is supportive of Kimberly Clark’s ability to pass on higher prices, said Teixeira.

“While we believe that KMB may have a bumpy trajectory ahead of it in terms of fully passing list price increases to consumers in [North America], slowing demand in developing markets, FX headwinds and continued pressures from input cost inflation, we think that the recent stock rerating will continue until investors get more visibility on price acceptance in the first half of 2019."

Price Action

Kimberly Clark shares were up 1.48 percent at $118.18 at the time of publication Thursday. 

Related Links:

Cramer Questions Why Apple Trades At Valuation Discount To Procter & Gamble

Jim Cramer Weighs In On Allergan, Procter & Gamble And More

Latest Ratings for KMB

DateFirmActionFromTo
Oct 2018CitigroupMaintainsSellSell
Oct 2018Wells FargoMaintainsMarket PerformMarket Perform
Oct 2018Deutsche BankDowngradesHoldSell

View More Analyst Ratings for KMB
View the Latest Analyst Ratings

Posted-In: Andrea Teixeira JPMorganAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (KMB + PG)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
BAPItau BBAUpgrades274.0
DVNJP MorganDowngrades37.0
EOGJP MorganUpgrades118.0
EQMBarclaysDowngrades48.0
EXPDGoldman SachsDowngrades68.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

What Is The Buffett Indicator?

Goldman Sachs: Chinese Vehicle E-Commerce Platform Uxin Should Be Profitable By 2020