On Monday, Deutsche Bank updated its outlook on Church & Dwight Co. Inc. (NYSE:CHD) shares, increasing the price target to $112 from $109 while maintaining a Buy rating on the stock.
The firm anticipates a strong first quarter of 2024, supported by a 6.2% rise in tracked channel consumption momentum, an improvement from the 5.5% increase in the fourth quarter of 2023. This growth is partly attributed to a surge in laundry detergent sales, coupled with the anticipation of new product launches.
Despite the positive forecast, the analyst noted several challenges, including macroeconomic pressures in some international markets, consistent with trends seen among Home and Personal Care (HPC) peers. Additionally, the company is experiencing ongoing weakness in vitamin sales, which continue to decline in double digits within tracked channels. Foreign exchange pressures are also present, albeit limited for Church & Dwight.
Church & Dwights financial performance is expected to be bolstered by ongoing productivity savings and Revenue Growth Management (RGM) strategies, which are likely to offset potential margin pressures from rising commodity costs, such as crude oil and polyethylene.
The analyst believes these measures will enable the company to reaffirm its full-year 2024 guidance, projecting organic growth and sales growth of 4-5%, a gross margin improvement of 50-75 basis points, operating margin expansion of 60-80 basis points, and earnings per share (EPS) between $3.39 and $3.46. These targets are considered fully achievable by Deutsche Bank.