Colgate-Palmolive Remains One Of The Highest-Quality Names Despite Tough End-Market Backdrop: Goldman Sachs

Core Viewpoint - Goldman Sachs analyst Bonnie Herzog maintains a Buy rating on Colgate-Palmolive Co (CL) with a price target of $106, despite mixed fourth-quarter results [1] Financial Performance - CL reported fourth-quarter earnings per share (EPS) of$0.91, exceeding expectations of $0.88/$0.89 [1] - Organic sales growth for the fourth quarter was 4.3%, which was below predictions, affected by a 50 basis point decline from lower private label volumes in Pet Nutrition [1][2] - The lower tax rate of 21.6% contributed a $0.04 boost to EPS, aiding in the small EPS beat for the quarter [3] Segment Performance - Hill's Pet Nutrition faced challenges in Europe, resulting in a miss in segment growth [2] - North America's organic sales declined by 0.7%, while Europe and APAC saw low-to-mid single-digit growth; Latin America and Africa/Eurasia experienced high single-digit increases [2] Future Guidance - Management provided initial FY25 guidance, which aligns with expectations, but foreign exchange headwinds are anticipated to impact net sales and possibly EPS [3] - The company's organic sales growth forecast of 3%-5% is consistent with its long-term target, factoring in the planned exit from private label pet nutrition in 2025 [4] Market Position - CL is considered a top-tier company in the HPC coverage, consistently outperforming and raising its FY24 outlook despite challenging market conditions [5] - The analyst expects a more balanced environment in FY25 with slower price growth and improved volume/mix trends [5] Risks and Challenges - Foreign exchange remains a potential risk, likely affecting gross margins and dollar EPS growth [6] - Despite weaker-than-expected organic sales growth, the company is expected to maintain healthy revenue growth driven by favorable market trends and market share expansion [6]