Kimberly-Clark's Growth Potential 'Underestimated,' Analyst Sees Attractive Entry Point

Goldman Sachs analyst Bonnie Herzog reiterated the Buy rating on Kimberly-Clark Corporation KMB stock, with a price forecast of $152.

The company reported third quarter adjusted earnings per share of $1.83, beating the street view of $1.70. Quarterly revenues of $4.952 billion missed the analyst consensus of $5.048 billion.

According to Herzog, Kimberly-Clark’s management efforts on productivity and the current environment are conducive to margin expansion.

The analyst projects that the market underestimates the company’s potential for gross margin growth, which should lead to healthy EPS growth despite increased reinvestments.

Also Read: Retail Inventory Pressures Hit Kimberly-Clark’s Annual Outlook, Stock Slides

Herzog also forecasts that Kimberly-Clark’s segment reorganization will enhance execution moving forward.

As a result, the analyst sees a favorable risk/reward scenario, with Kimberly-Clark’s improving fundamentals contrasting sharply with its deep valuation discount compared to its HPC peers, offering an attractive entry point for investors.

The analyst indicated that adjusted EBIT is expected to grow in the mid-to-high teens on a constant currency basis, with adjusted EPS also projected to rise similarly.

For the fourth quarter of 2024, organic sales growth is expected to be about 4% at the mid-point, versus Goldman Sachs’ estimate of 5.0%.

The projected all-in EPS is $1.46, ranging from $1.33 to $1.60, reflecting a constant currency growth of 15% – 19%, compared to Goldman Sachs’ estimate of $1.60.

Price Action: KMB shares are trading lower by 4.30% to $138.01 at last check Tuesday.

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