Credit Suisse Hopes On Colgate-Palmolive's Underlying Strength Despite FX Risk - Colgate-Palmolive (NYSE:CL)

Credit Suisse analyst Kaumil Gajrawala reiterated an Outperform rating on the shares of Colgate-Palmolive Co CL and lowered the price target to $85 from $88.
The analyst said Colgate’s shares are down 15% year-to-date owing to risks from the rising dollar and fears of global recession.
However, the analyst added, trends across Colgate’s categories continue to improve as the company realizes the benefits of investments, advertising is up 22% versus the pre-pandemic levels, while capex has nearly doubled.
Gajrawala thinks consumers in emerging markets such as Brazil and Mexico are holding up better than feared.
Colgate’s trends in the U.S. tracked channels have improved sequentially, led by personal/home care.
Effects of destocking as Amazon.Com, Inc. AMZN and other e-tailers close warehouses, and tightness in pet food capacity may impact Q3 shipments, though the analyst views this as temporary.
Gajrawala continues to forecast margins to improve sequentially as commodity inflation eases and savings from Colgate’s global productivity initiative kick in, albeit at a slower pace, given worse F/x trends.
He added that Colgate is showing evidence that efforts to reposition the business are starting to pay off as oral care gains market share and Hill’s growth continues.
Despite worse commodities and currencies, the analyst thinks the breadth of Colgate’s portfolio and under-indexing in certain categories are relative advantages.
Price Action: CL shares are trading higher by 0.91% at $72.80 on the last check Tuesday.
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