Analyst downgrades Colgate as share price jumps
Analyst downgrades Colgate to "Equal Weight," says stock fairly valued in the near term
NEW YORK (AP) -- Colgate-Palmolive Co.'s shares reflect Colgate's advantages in the consumer product industry for now, an analyst said Friday as he lowered his rating on the stock to "Equal Weight" from "Overweight."
Colgate's shares have risen over the past two years as it benefited from missteps by larger rival Procter & Gamble, its large presence in quickly growing emerging markets and its mix of products, from Colgate toothpaste to Palmolive dish soap.
Morgan Stanley analyst Dara Mohsenian said that she has recommended Colgate as a top pick over the past 18 months. She said as the stock price has risen, its advantages are reflected in the stock price. Colgate shares have risen 9 percent since the beginning of the year and hit an all-time high of $116.71 on March 7.
The company has decided to implement a 2-for-1 stock split, its first since 1999. The split will occur via a stock dividend on April 23, with share distribution on May 15.
Companies typically split their stock when they think the price of an individual share has gotten too expensive or if the stock is trading too far above similar companies' stock. The value of each shareholder's stake remains the same, albeit at a lower price for each share.
Mohsenian added that beverage companies are now a more attractive area than home products companies due to weaker revenue trends.
She recommended PepsiCo Inc., which she rates as "Overweight," and Coca-Cola Co., rated as "Equal Weight," over household product companies such as Procter & Gamble and Colgate.
Colgate shares fell $1.40, or 1.2 percent, to $112.44 in afternoon trading. PepsiCo shares fell 23 cents to $76.96, Coca-Cola shares slipped 22 cents to $38.80 and P&G shares lost 47 cents to $76.92.