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Colgate Stock Fell After Earnings. Why an Analyst Says Now Is the Time to Buy.

Colgate is a top household products pick for Morgan Stanley analyst Dara Mohsenian.

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Luke Sharrett/Bloomberg

stock was climbing Monday after a
Morgan Stanley
analyst upgraded shares of the personal care products company.

Dara Mohsenian upgraded shares of Colgate (ticker: CL) to Overweight from Equal Weight and maintained his $82 price target. Mohsenian also named Colgate as Morgan Stanley’s top household products pick, just days after the stock dropped on disappointing organic sales growth guidance.

“We are upgrading CL to Overwight, believing that a sharp recent stock pullback…during which CL underperformed the S&P 500 by nearly 1,800 basis points, is offering a buying opportunity into a structurally attractive name,” Mohsenian wrote in a research note Monday.

Shares of Colgate jumped 2.7% Monday on the analysts’ optimism, which was the stock’s largest percent increase since Oct. 13, according to Dow Jones Market Data. The stock was also the third-best performer in the
S&P 500

Last week, Colgate reported a strong fourth quarter, as sales and earnings came in just above analyst expectations. However, investors were focused on the company’s disapointing guidance, which caused the stock to drop.

There is also the uncertainty surrounding the near-term future of the consumer. Inflation is historically high, and consumers have felt it affect their everyday lives as the price for groceries, energy, and more have increased.

“We believe we are well-prepared for 2023, but there’s still a lot of uncertainty in the world. The macroeconomic environment outlook remains volatile which can impact consumer spending,” Colgate chief executive Noel Wallace said on the company’s earnings call.

Another reason Mohsenian is bullish on the stock is that he believes the company has a strong pricing power. Colgate has raised its prices as inflation has increased costs across the board.

For Colgate’s pet food segment specifically, pet owners are reluctant to switch food brands, even as prices increase, “given digestive issues and their affection for their pets,” Mohsenian wrote.

Shares of Colgate have declined 6.9% this year.

Write to Angela Palumbo at


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