Colgate-Palmolive's (CL) Q3 results indicated a soft quarter but the company will likely start seeing an improvement from here in organic sales growth as "comparisons ease and temporary pressure points from Q3 dissipate," Morgan Stanley said in a note emailed Monday.
The investment firm said that Colgate's Q3 results showed it missed Street estimates for organic sales growth by 90 basis points, which was more or less in line with expectations, and gross margins by 100 basis points, which was "more unexpected."
Morgan Stanley highlighted the fact that Colgate has kept its 2025 EPS guidance with "SG&A/tax favorability driving Q3 EPS upside" but the investment firm believes Colgate has "moved slightly lower within its FY EPS range."
Morgan Stanley kept its overweight rating on the company, but cut Colgate's price target to $87 from $96, citing a "lower multiple reflecting structurally lower [home and personal care] sector topline growth."
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