Argus lifted its rating on Church & Dwight (NYSE:CHD) to Buy from Hold on its view that the share price decline will reverse.
Analyst Kristina Ruggeri noted that the household products company sells 15 power brands, which are either number one or number two in their respective product categories. CHD is also noted to have churned up mid-single-digit organic sales growth and 10% EPS growth for more than 10 years.
"However, in 2022, supply-chain disruptions have deeply impacted the company's ability to meet demand and rising costs have put pressure on margins. The company has also seen lower demand for vitamins and higher-margin discretionary products."
Still, Ruggeri sees some recent positives that could indicate momentum will flip. Front and center, fill rates continue to improve and are expected to return to normal by the end of the year, while market share gains for CHD's lower-priced value portfolio have also been made. The consumer trade-down effect should continue to benefit CHD in an inflationary environment, tips Ruggeri. In addition, strong sales of power brand Zicam could be a Q4 earnings booster due to expectations for a severe flu season.
Argus assigned a price target of $78 to Church & Dwight (CHD).
Shares of CHD gained 0.87% in early trading on Monday to $72.02.
The Seeking Alpha Quant Rating on CHD flipped to Hold from Sell on November 1.