Church & Dwight Co. ( NYSE: CHD ) gained in early trading on Monday morning after Morgan Stanley upgraded the household products stock to an Equalweight rating from Underweight ahead of the company's earnings report on October 28.
Analyst Dara Mohsenian and team expect the focus of investors will be on updated trends and the outlook in weaker areas, including Waterpik, vitamins, and Flawless. Other areas of interest will be on if CHD saw an impact from trade down with its value portfolio, demand elasticity to pricing and the timing on when CHD may start to see some relief from input costs given the recent drop in spot commodity costs.
"We are warming up to the HPC sector vs. our prior selective stance as cost pressures continue to come down with lower spot prices, and the HPC stocks underperformance YTD, which applies even more so to CHD."
Morgan Stanley said valuation looks reasonable after CHD's recent stock underperformance vs. large cap peers like PG, CL, KO and PEP this year. The firm assigned a price target of $82 to give shares room to run from Friday's closing price of $72.50.
Shares of Church & Dwight ( CHD ) rose 3.42% in premarket action to $74.98 vs. the 52-week trading range of $70.16 to $105.28.
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Church & Dwight rallies after Morgan Stanley pulls bearish view ahead of earnings