Market Overview

Goldman Sachs Upgrades Church & Dwight, Says Recent Sell-Off Presents Opportunity

Goldman Sachs Upgrades Church & Dwight, Says Recent Sell-Off Presents Opportunity

Shares of Church & Dwight Co., Inc. (NYSE: CHD) fell by around 7.5 percent after the consumer goods company's fourth-quarter print. This compares with a 0.5-percent rise in the S&P 500 over the same period.  

There is not enough downside to the company’s shares to justify a bearish rating, according to Goldman Sachs.

The Analyst

Goldman Sachs’ Jason English upgraded Church & Dwight from Sell to Neutral and raised the price target from $60 to $61.

The Thesis

Church & Dwight’s shares have appreciated 54 percent since Goldman Sachs lowered its rating to Sell in January 2016, English said in a Tuesday note. 

The Sell rating, which was largely based on the company’s growth being impacted by competition, has proved to be “an ineffective recommendation,” the analyst said. 

Church & Dwight has guided to a significant deceleration in consumer domestic sales growth to 2.5 percent in FY19 from the 4.3 percent recorded in FY18, English said. This guidance seems to reflect the risk of deceleration in laundry, and the company is likely to be able to achieve the target on recent price increases alone, he said. 

The company’s guidance of gross margin expansion of 10 basis points also seems to “embed associated margin-mix and reinvestment risk when we contemplate what should be an easing input cost environment throughout the year,” English said. 

Price Action

Church & Dwight shares were up 3.8 percent at $62.76 at the time of publication Wednesday. 

Related Links:

Benzinga's Top Upgrades, Downgrades For February 6, 2019

A Peek Into The Markets: US Stock Futures Down Ahead Of Earnings

Latest Ratings for CHD

May 2020SunTrust Robinson HumphreyMaintainsBuy
May 2020SunTrust Robinson HumphreyMaintainsBuy
May 2020StifelMaintainsHold

View More Analyst Ratings for CHD
View the Latest Analyst Ratings


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