Atlantic Equities stepped away from its formerly bearish view of Church & Dwight ( NYSE: CHD ) on Monday, advising clients of easing headwinds into 2023.
The upgrade from Underweight to Neutral notes that the company has seen sales declines and margin pressure on many key brands in recent years. However, the analysis suggests that these adverse impacts are nearing an inflection point.
“Longer term, in the form of Zicam, TheraBreath and Hero, CHD has acquired three brands that could support elevated organic sales growth over the next few years as well as provide accretive mix to gross margins,” the firm’s analysts wrote on Monday. “However, in the near term, CHD has to focus on recovering fill rates and sustaining recent pricing, both of which will lead to increased CAPEX and opex spend weighing on both FCF conversion and EPS growth.”
These factors balance the risk/reward dynamics and make a Hold-equivalent rating appropriate at this point, the analysts advised. The team assigned a $80 price target to the stock.
Read more on the company’s latest earnings result .
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Church & Dwight upgraded as Atlantic Equities sees balanced risk/reward