Church & Dwight's growth strategy makes it a top pick: Oppenheimer

By Liz Moyer

Investing.com -- Church&Dwight Company Inc (NYSE:CHD), the maker of Arm&Hammer baking soda and Waterpik personal care devices, has a growth strategy driven by deals and remains on the outlook for opportunities, according to analysts at Oppenheimer.

The analysts put the consumer product company back on its top picks list, with a price target of $93 and an outperform rating.

Shares of Church&Dwight fell 1.2% on Tuesday but are up 1.9% so far this year. Oppenheimer’s price target implies 13% upside from current levels.

The analysts took away a few things at Church&Dwight's recent analyst day. The company “communicated a clear desire for M&A in fast moving consumables categories,” the analysts wrote in a note. That ambition is backed up by its recent deal for Hero, a maker of acne treatments, and also for deals in the recent past, including its purchase of Zicam, a maker of allergy and cold remedies.

“We look favorably upon CHD's product portfolio, track record of innovation, competitive position, historical success in adjusting to changing retail environments, management team, and consistent record of execution,” the analysts wrote. “We believe shares offer both growth and defense and are optimistic the company is on the path to return to its historical algorithm in 2024.” 

During the presentation, management showcased a number of new products, and demonstrated its strong position in weathering tough times, saying 40% of its product mix falls in the value category.

Oppenheimer said the company is positioned for accelerating fundamentals in late FY23 and into FY24. The firm’s base assumption is earnings power of $3.30 per share in FY24 and organic sales growth of about 3% in a normalized environment.