On Wednesday, BofA Securities updated its outlook on Kimberly Clark (NYSE:KMB), increasing the price target from $110.00 to $115.00, while maintaining an Underperform rating on the stock. The revision follows Kimberly Clark's announcement of raised guidance for 2024.
The company now anticipates organic sales growth in the mid-single digits, an improvement from the previously forecasted low to mid-single digits. However, this projection is tempered by an expected 400 basis points impact from currency fluctuations, up from the 300 basis points previously anticipated, and divestiture impacts of 120 basis points, doubling the earlier estimate of 60 basis points.
Kimberly Clark projects that reported net sales will be evenly distributed between the first and second halves of the year. Despite this, BofA Securities foresees potential margin stability challenges.
The firm anticipates steady margins but also acknowledges downside risks as the year progresses, citing rising commodity costs, including energy and pulp, as well as increased labor costs. Additionally, marketing expenditures are expected to rise throughout the year.
In light of these factors, BofA Securities has adjusted its second-quarter earnings per share (EPS) estimate for Kimberly Clark to $1.67, up from $1.63, and has also raised the full-year 2024 EPS forecast to $7.06 from $6.80. This revision is based on the better-than-expected performance in the first quarter, which is partially offset by the anticipated higher marketing spend.
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