On Friday, Argus upgraded shares of Church & Dwight Co. Inc. (NYSE:CHD) from Hold to Buy, setting a price target of $115.00. The upgrade reflects the company's strategic focus on its 'power brands,' which hold leading positions in their respective product categories. Church & Dwight, known for manufacturing and marketing personal care, household, and specialty products, has seen stable market conditions with the weighted average private label market share in its categories remaining consistent at about 12%.
The company's management has been actively refocusing on brands that are either number one or number two in their market segments, aiming for high growth and high margins. This initiative has been accompanied by a series of acquisitions, with the company planning to continue this strategy to enhance its brand portfolio. Church & Dwight's online sales have also shown significant growth, accounting for 20% of total revenue in 2023, an increase from 16% in 2022 and 15% in 2021.
In the past year, Church & Dwight observed remarkable achievements, with products like Arm & Hammer laundry detergent and litter, Batiste, TheraBreath, and Hero reaching record high market shares. This success is part of the reason behind the analyst's positive outlook. Furthermore, Church & Dwight has a strong track record of rewarding shareholders, having increased its dividend annually at an average rate of 4.5% over the past five years.
The analyst's endorsement of Church & Dwight's stock is based on the belief that the company's renewed emphasis on its strongest brands will drive market share gains. This strategy aligns with the management's goal of achieving 8% annual growth in earnings per share (EPS). The company's robust performance and strategic initiatives appear to be key factors in the upgraded rating and optimistic price target.
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