- Raymond James analyst Olivia Tong reiterated a Market Perform rating on the shares of Colgate-Palmolive Company CL.
- FX and commodity inflation pressures have been alleviating but are still substantial, so in the analyst’s view, pricing will continue to play a key role in CL’s delivery on sales and margins.
- The analyst said elasticities would also be a key focus area, particularly in the U.S., Europe and Latin America.
- During 3Q, pricing contributed 11.5 points to y/y organic sales growth while volume fell 4.5 points. The analyst believes 4Q will look similar as the analyst expects elasticities to remain better than historical norms.
- Hills had an uncharacteristically challenging 3Q due to supply chain constraints and inventory management by retail, but the analyst expects 4Q to see a rebound, helped by the Red Collar acquisition, which is expected to contribute 2 points to Hill’s sales.
- 4Q ad margin is expected to be up y/y, in part due to spending that did not occur in 3Q due to the Hill’s capacity constraints, which is expected to shift into 4Q, said the analyst.
- Looking to 2023, top considerations in the analyst’s view include the impact of softening consumer sentiment on CL’s ability for further premiumization, with average price in oral care still at a 90% price index to the market but recent toothpaste innovations like Optic White retailing for $10.
- The analyst said that visibility into pricing, particularly in 2H23, and global category growth expectations would also be important factors.
- Price Action: CL shares are trading lower by 0.03% at $75.46 on the last check Monday.
CLColgate-Palmolive Co
$93.720.81%
Edge Rankings
Momentum
67.24
Growth
50.47
Quality
51.52
Value
20.37
Price Trend
Short
Medium
Long
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