Morgan Stanley Maintains Equal-Weight On Church & Dwight After Recent Earnings

Morgan Stanley remains Equal-weight on Church & Dwight CHD, given results should be limited by CHD's 81% topline exposure to the US, where consumer spending remains weak, and valuation towards the high-end of the HPC group, which already reflects CHD's strong balance sheet and continued market share gains. After a low-quality Q1 EPS result, Morgan Stanley's EPS estimates are unchanged. CHD reiterated its 2011 outlook of 3-4% organic revenue growth, 50-100 bps of GM improvement, and $4.35-$4.40 in FY EPS. However, a lower tax rate, along with higher charges, adds a net of 6 cents to EPS. CHD also lowered its marketing guidance to flat to +50 bps. Morgan Stanley remains Equal-weight after low-quality Q1 results, as CHD is managing around a difficult industry environment by flexing marketing. Morgan Stanley believes valuation already reflects CHD's strong balance sheet and market share gains. CHD closed Friday at $78.90