Colgate-Palmolive: Analyst Downgrade Despite Solid Fundamentals

The stock price of Colgate-Palmolive came under pressure at the beginning of the week as analysts from Stifel downgraded the company's rating from "Buy" to "Hold." At the same time, the price target was slightly lowered to 101 USD, which corresponds to a 17-times EBITDA for the year 2025. Although Stifel analysts largely maintained their estimates for the years 2024 to 2026, they expressed concerns about Colgate-Palmolive's growth dynamics. Given increasingly challenging comparable figures in the area of organic growth, the company could see more moderate growth of 4% to 5% in the coming quarters—a decline from the high single-digit growth rates of previous years. This development follows a successful increase in the gross margin for the third quarter, which exceeded market expectations. This increase is primarily attributed to cost-saving initiatives, price adjustments, and an improved product mix strategy, although it was partially offset by rising raw material costs. Despite the challenges, management continues to invest in strategic areas such as advertising. While Colgate-Palmolive maintains a global market share of over 40% in oral care, they are experiencing a slight decline in value share for toothpaste and manual toothbrushes in the US market. The dominant position in pet food also significantly contributed to the company's overall success in the last quarter with organic growth of 6.5%. Interestingly, Stifel sees Procter & Gamble as an emerging competitor that could benefit from easier comparables and thus exert pressure on Colgate-Palmolive's market position.