Colgate-Palmolive (CL) Stock Forecast & Price Target

Colgate-Palmolive has demonstrated strong organic sales growth, particularly in China, achieving high-single digits and bolstering an overall 4.3% growth for the quarter, driven by a combination of volume and pricing increases. The company's gross margin also saw a year-over-year increase of 70 basis points to 60.3%, supported by cost savings initiatives and pricing strategies, despite challenges from rising raw material costs. With significant market share gains in key categories and a reinforced focus on international expansion, the company is positioned to meet or exceed its long-term sales growth targets.

Colgate-Palmolive's recent performance reveals a troubling trend, as the company's organic sales growth of 4.3% fell short of the consensus estimate of approximately 6%, indicating potential further weakening in the upcoming periods. Additionally, the gross margin for 4Q24 was below expectations, and while guidance anticipates expansion in 2025, it is projected to be significantly less than the 240 basis points achieved in 2024, reducing the company's capacity for reinvestment amidst increasing advertising expenditures. Furthermore, the pet care segment showed softness with organic sales growth of only 2.8%, compounded by adverse volume impacts, and both emerging and developed markets experienced deceleration in growth on a two-year basis, signaling a challenging consumer environment.