🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

Kimberly Clark shares upgraded to buy by BofA

EditorAhmed Abdulazez Abdulkadir
Published 2024-06-13, 12:10 p/m

On Thursday, BofA Securities revised its stance on Kimberly Clark (NYSE:KMB) stock, raising the rating from Underperform to Buy and significantly increasing the price target to $160 from the previous $115. The adjustment comes after Kimberly Clark displayed a positive shift in volume during the first quarter, marking a turnaround from two years of volume declines.

The upgrade reflects the analyst's optimism regarding the company's trajectory following its March 2024 Investor Day. According to BofA Securities, Kimberly Clark is entering a phase of long-term improvement, driven by strategic initiatives aimed at enhancing performance and market position.

Key to Kimberly Clark's favorable outlook is the company's efforts to decouple the costs of pulp and energy inputs from its gross margin, which is expected to lead to more consistent margin expansion. Additionally, the company is anticipated to increase its market share, particularly in the premium tier, and to win over customers from competitors in the mainstream segment.

Continued innovation is also a cornerstone of Kimberly Clark's strategy to grow at or above the market rate in its key categories. BofA Securities indicates that these developments are likely to result in an expansion of the company's valuation multiples, aligning more closely with its household and personal care (HPC) peers as it sheds its image as a highly commoditized business.

In other recent news, Kimberly Clark has been in the spotlight due to a series of significant developments. RBC (TSX:RY) Capital recently upgraded Kimberly Clark's stock from Sector Perform to Outperform and raised the price target from $126.00 to $165.00. This came after a thorough review of the company's operations and strategy, signaling a shift from a cost management focus to a growth orientation.

In addition, Patricia Corsi has been appointed as Kimberly-Clark (NYSE:KMB)'s new Chief Growth Officer, effective July 1, 2024. Corsi, known for her successful stint at Bayer (OTC:BAYRY) Consumer Health, will be replacing Alison Lewis, who is retiring after a 35-year tenure in the consumer products sector.

Kimberly-Clark also announced the continuation of its 90-year dividend payment tradition, marking the 90th consecutive year of dividend payouts and the 52nd year of dividend increases. This is a testament to the company's financial stability and commitment to shareholder returns.

Furthermore, HSBC raised the stock price target for Kimberly Clark to $150 from $146, maintaining a Hold rating on the stock. The new target suggests an 11% upside potential and is based on a projected margin recovery and benefits from a cost savings program.

Lastly, Kimberly Clark's recent financial results displayed a positive turn in volumes and higher-than-expected pricing in areas experiencing hyperinflation, leading to a significant beat on organic growth projections.

InvestingPro Insights

Following the upgrade by BofA Securities, Kimberly Clark (NYSE:KMB) stands out with several key financial metrics and achievements that further support the analyst's positive outlook. InvestingPro data reveals a resilient market capitalization of $46.64 billion and a forward-looking P/E Ratio for the last twelve months as of Q1 2024 at 19.74, which suggests a valuation that might attract investors looking for stable earnings. Additionally, the company's dividend yield as of mid-2024 is 3.61%, a testament to its commitment to shareholder returns, which is further underscored by a remarkable track record of raising its dividend for 51 consecutive years—an InvestingPro Tip that highlights the company's reliability in providing consistent shareholder value.

Moreover, Kimberly Clark's dedication to maintaining dividend payments for 54 consecutive years aligns with the strategic initiatives commended by BofA Securities, reinforcing the company's financial stability. However, an InvestingPro Tip notes that the company's short-term obligations exceed its liquid assets, indicating a need for careful cash management. For those considering an investment in Kimberly Clark, the company's moderate level of debt and its profitability over the last twelve months are encouraging signs, paired with analysts' predictions of continued profitability this year.

To gain a deeper understanding of Kimberly Clark's financial health and to access additional InvestingPro Tips, interested readers can explore the company's profile on Investing.com. For a more comprehensive investment analysis experience, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 6 more InvestingPro Tips available, investors can make well-informed decisions backed by real-time data and expert insights.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.