Colgate-Palmolive Company (NYSE:CL) shares soared Monday on the news that several analysts had issued an upgrade on the company.
The toothpaste maker was upgraded at Morgan Stanley to kick off the week. The analysts at the company said that valuation and projections of re-acceleration in sales growth were the reasons behind the upgrade.
Analyst Dara Mohsenian also increased his rating in Colgate-Palmolive Company from “equal weight” to “overweight,” while CL’s price target was raised from a previous rating of $75 to a new one of $84 now.
The company had recently scored the lowest mark in a recent survey of investors on sentiment among mega-cap consumer staples companies due to disappointing sales growth in three straight quarter, while earnings were below the mark for these periods.
Nevertheless, Mohsenian believes that Colgate-Palmolive Company’s revenue growth is slated to surge due to easier comparisons and a rebound in emerging markets. Additionally, he believes the market is “mispricing” the company’s strategic options and competitive positions.
“We see a rare opportunity to buy a well-positioned business at a valuation level close to structurally less-attractive peers, as [Colgate-Palmolive’s] topline slowdown vs. peers has driven stock underperformance,” Mohsenian wrote in a note to clients.
CL shares surged about 3.3% Monday. Over the last three months, the stock has dropped about 3.1%, but it has performed well overall in the current calendar year, popping 12.5%.