These Analysts Sees Strong Above-Peer Growth Potential In Church & Dwight: Here's Why

Raymond James analyst Olivia Tong upgrades Church & Dwight Co Inc CHD to Market Perform from Underperform

The analyst re-rates the stock, given its justified premium to its peers on the acquired Hero and Therabreath businesses and strong cash flow generation.

Also, Tong sees CHD benefiting from Clorox Company'sCLX unfortunate cyberattack, particularly in cat litter and laundry stain-fighting, in the near term. 

RelatedClorox Faces Challenges from Cyberattack; Analyst Predicts Slow Recovery Until FY25

For Q3, the analyst raises the organic sales estimate to +5% Y/Y from +4.5% prior (price/mix +3%, volume growth +2%) and expects gross margin expansion of +240 bps Y/Y on lower raw material pressures.

Overall, Tong projects H2 to be strong as the company is well positioned to benefit amid consumer trade down and higher marketing spending targets, suggesting potential for greater flow through if gross margin expansion is ahead of expectations.

The analyst raises EPS estimates to $3.18 (from $3.17) vs. the consensus of $3.17 for FY23 and lowered to $3.43 (from $3.45) in line with the street view for FY24. 

On the other hand, Morgan Stanley analyst Dara Mohsenian maintained an Overweight rating and a price target of $114.00 on the company.

The analyst expects above-peers and above-consensus organic sales and EPS growth in H2/2024 with strong core brand trends and higher contribution from the high-growth acquisitions TheraBreath and Hero.

Also, the analyst sees easier comparisons, improving supply chain, higher ad spend, and a favorable impact from consumer trade down as tailwinds.

The analyst estimates EPS of $3.21 (vs. $3.16 consensus) for FY23, $3.51 (vs. $3.43 street view) for FY24, and $3.85 (vs. consensus $3.69) for FY25. 

Price Action: CHD shares are trading higher by 1.43% at $91.41 on the last check Monday.

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