On Monday, Stifel adjusted its outlook on Church & Dwight Co. Inc. (NYSE:CHD), reducing the price target to $105 from the previous $107. The firm maintained a Hold rating on the stock. The revision follows Church & Dwight's second-quarter 2024 performance, where the company reported sales and EBIT figures that were marginally above consensus.
However, the company's full-year guidance for these metrics is expected to hit the lower end of its prior projections, with organic sales and adjusted EPS growth forecasted at 4% and 8%, respectively.
The updated guidance from Church & Dwight takes into account the observed slowdown in U.S. category growth. The company noted a decline in growth within its eight principal categories to 2.0% in June and July, down from a 4.5% year-to-date figure through May.
This deceleration has led to the adjusted projections for the second half of 2024, which suggest organic sales growth of 3.5%-4.0%, in contrast to the current 2.5% category growth. This is a dip from the 5.0% organic sales growth experienced in the first half of the year, which was against approximately 4.0% category growth.
The company's guidance also hints at a potential increase in reinvestment. Church & Dwight indicated that it plans to maintain financial flexibility to counteract any further weakening in category growth or an uptick in promotional activities. This strategy is designed to serve as a balance to anticipated gross margin expansion, ensuring the company can respond effectively to market changes.
Church & Dwight's strategic approach, as outlined in the recent guidance, reflects a cautious stance in the face of a dynamic market environment.
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