Jefferies turned positive on the upside for the household and personal care products sector due to easing macro headwinds, improving category perception, and what it sees as a heavy innovation slate for the year ahead.
Analyst Kaumil Gajrawala and his team upgraded Procter & Gamble (PG) and Church & Dwight (CHD) to Buy from Hold to join Clorox (CLX) and Reynolds Consumer Products (REYN) in the Buy category. The firm stayed cautious on Colgate-Palmolive (CL) due to softer oral care views and slowing premium pet sales.
For Procter & Gamble (PG), Jefferies thinks its scale and category breadth create a strong platform for innovation-led growth. “Restructuring tailwinds are meaningful, and top-line should lever nicely as it returns. A new CEO adds another catalyst,” wrote Gajrawala. The firm’s price target of $179 is based on a 24X multiple of the F27 EPS estimate.
For Church & Dwight (CHD), the company’s portfolio moves (Touchland, VMS) are expected to strengthen its mix and margins, while innovation is also expected to add incremental growth. “The runway is compelling given low household penetration and international expansion,” advised Gajrawala. Jefferies’ price target of $102 PT is based on a 26X multiple of the F27 EPS estimate.
Shares of Procter & Gamble (PG) were up 0.7% in premarket trading. Church & Dwight (CHD) showed a 1.4% gain in the early session.
Procter & Gamble (PG) and Church & Dwight (CHD) are top holdings in the Invesco Dorsey Wright Consumer Staples Momentum ETF (PSL).