Kimberly-Clark's Long Term Outlook, Cost Savings Plan Looks Encouraging, Analyst Says

Mar 28, 202418:12 UTC

Piper Sandler analyst Korinne Wolfmeyer reiterated an Overweight rating on the shares of Kimberly-Clark Corp KMB and raised the price target from $145 to $152.

KMB is entering a new operating model focused on accelerating innovation across powerhouse brands, optimizing the cost structure, and re-organizing operations into three new business segments.

According to the analyst, about $200 million of selling, general and administrative savings should be realized over the next 2 years which should be reinvested back into the business.

Come of the strategies the company is planning to implement include, winning recruitment moments, innovation that encourages customer trade up, scaling innovations globally and mergers & acquisitions to support growth categories.

Though the analyst is re-assured with the management's focus on categories with low private-label penetration, it may take time for these efforts to materialize and build stronger confidence.

The longer term cost savings and operating profit growth management should lead to building an efficient and productive supply chain network.

With the 3%+ top line growth and margin expansion, management is now pointing to MSD-HSD% operating profit and adj. EPS growth over the long term, as well as more than $2 billion in annual free cash flow.

This, according to the analyst, will help support a growing dividend and share repurchases.

Price Action: KMB shares are trading higher by 1.91% at $129.71 on the last check Thursday.

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