Church & Dwight upgraded to Buy at Truist on improved fundamentals

Truist Securities analysts upgraded Church & Dwight Co Inc (NYSE:) shares to Buy from Hold with a price target raised by $10 to $105 per share.

Truist’s downgrade of the stock over a year ago was rooted in concerns about the potential continuation of uneven trends experienced during the first half of 2022. These concerns were particularly tied to certain key categories that had witnessed remarkable growth during the pandemic, and were now grappling with what was described as a “post-pandemic hangover.”

Specifically, categories like vitamins and cat litter saw exceptional growth due to temporary shifts in consumer behavior during the pandemic.

“In fact, the vitamin business has struggled over the past year with a shrinking category and lost market share, however the cat litter business has remained strong,” the analysts said in a note.

The upgrade move comes after strong and raised guidance.

“We view these results as a sign that the company and its categories are largely out of the woods from the post-pandemic reversion. Additionally, if key competitors, notably PG in detergent and CLX in litter, hold the line on pricing for the remainder of the year, as they have stated, we believe there is further upside to our margin and EPS estimates for CHD,” Truist analysts added.

Finally, they cited that CHD is back to its normal operating rhythm, which is seen as a major positive for the stock.

CHD shares are up 1% in early Monday premarket trade.