Shares of Kimberly-Clark ( KMB ) rose early Thursday following an upgrade from Bank of America.
Financial analysts at the bank have changed their recommendation for KMB shares from a status that suggests the stock may underperform the market average to a status that suggests the stock may outperform the market average. They also raised their price target on the stock to $160 from $115.
“Following a positive change in KMB’s first-quarter sales following two years of declining sales, we expect a period of sustained improvement consistent with the company’s March 2024 investor day strategies.” analysts said.
Bank of America now has a more optimistic view of the consumer products and personal care company’s future. The company is working to make its overall profit margin less dependent on the costs of raw materials such as pulp and energy, which should lead to more orderly growth in profit margins.
Moreover, the company is expected to be able to capture more market share, especially in the high-end product category, “and lose market share to competing brands in more popular product categories,” the analysts continued. Bank of America also believes that KMB will continue to develop new products to grow sales at or above the overall market rate in key areas and achieve valuations similar to its competitors.
Bank of America recalled that its previous decision to downgrade its recommendation for Kimberly-Clark to a status that suggested the stock could underperform the market average in December 2023 was due to the belief that gross profit margin The company’s highest profit margin is 35.8. % was acquired in the third quarter of 2023. However, the company’s gross profit margin improved faster than expected to 37.1% in the first quarter of 2024.
Kimberly-Clark now aims to achieve “at least” 40% of gross profit by 2030 through cost cutting, further reductions in general and administrative expenses and more efficient operations in its supply chain.
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