Church & Dwight The Right Stock For Hard Times, Credit Suisse Says In Upgrade

Church & Dwight Co., Inc’s CHD business model is designed to thrive in today’s environment, and the company has historically maintained stability through difficult times, according to Credit Suisse.

The Church & Dwight Analyst: Kaumil Gajrawala upgraded Church & Dwight from Neutral to Outperform and raised the price target from $74 to $85.

The Church & Dwight Thesis: Church & Dwight has a value-oriented portfolio, a clean balance sheet and favorable M&A prospects, Gajrawala said in the Thursday upgrade note. (See his track record here.)

Around 37% of Church & Dwight’s sales are generated from value-priced brands, which are strong brands at low price points, the analyst said. The company has driven most of its growth via volume rather than pricing, which should prove advantageous in an economic downturn, he said. 

While terming Church & Dwight as a “serial acquirer,” Gajrawala pointed out that it has not inked a deal in 15 months, possibly due to inflated valuations. As valuations are contracting and with $1 billion in cash on its balance sheet, the analyst said a deal may now be in the offing for Church & Dwight. 

The stock offers “the highest return on capital and asset efficiency in the sector,” yet has underperformed over the past 12 months, trading at a 10-year valuation low versus the S&P 500, according to Credit Suisse. 

CHD Price Action: Shares of Church & Dwight were up 3.04% at $77.65 at the time of publication. 

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